M3A5 Cost-to-Charge Ratio Exercises

For the following questions, use the Cost-to-Charge Ratio Worksheets file provided. Provide your answers to ALL the question in an attachment. Use the Tip Sheet to walk through the assignment.

1. Use mappings to figure out cost-to-charge ratios for departments not yet calculated.

a. Apply relevant information to the trial balance to populate the cost centers, sub account information, salary/other type, and cost center.
b. In the charge section, apply mappings for cost center departments to the CDM summary.
c. Aggregate costs and charges in the cost-to-charge ratio tab.

2. An audit has uncovered mammography charges in an off-site clinic, but the costs for the mammography services are already allocated to the RAD-MAM department. The total charges for mammography in the clinic are $300,000. What is the new cost-to-charge ratio for mammography?

3. Due to competitive forces and favorable managed care contracting, management decides to restrike radiology charges such that the cost-to-charge ratio for each radiology department will be no less than 0.5000. What is the target for total charges for each category? If the change to charges is uniform, what is the factor to apply to each cost center’s charges (old price × conversion factor = new price)

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