The Westmount Retirement Residence (WRR) is calculating the cost per resident by dividing the total costs by number of residents. This number is then multiplied by inflation of 5 to 8…show more content… All costs are considered as fixed and divided by the number residents, and estimated the cost per resident. To keep the variation between Studio, one bed room , 2 bed room residents used a simple formula of 25% and 50% increase compare to the Studio residents costs.
In this model, the costs are not clearly divided on the basis of the needs, services, room size. The more benefited residents are with high medical needs as they are paying the same as with less medical needs. The food services, Support services which consists of 43% of the total cost must be properly accountable to the residents depends on the services taken by them.
- Question 3
Using the cost information in Exhibit 4 design a new costing system, taking into account the three suite options and the three levels of required patient care. What is the new cost per patient under each of the options?
The costs are as shown in the below table. The costs are calculated for 125 rooms (75 of Studio suites, 35 of One- bed room suites, 15 of Two- bed room suites) with 160 residents (55 residents with “No Medical Needs” , 65 residents with “Medium Medical Needs”, 40 residents with High Medical Needs). The tables in exhibit 5 and 6 are used for calculations. The detail calculations are available at exhibit 7
