| Course | HS440 Finance for Health Care |
|---|---|
| Unit | Unit 3 |
| Paper type | Cost behavior analysis |
| Length | About 600 words, 5 pages double-spaced |
| Format | APA 7 student paper |
| School | Purdue University Global |
| Program | BS in Health Science |
| Updated | October 2026 |
Free sample paper for HS440 Unit 3
Only 168 Dollars Moves With the Next Patient: A Unit 3 Cost Behavior Analysis of a Composite Endoscopy Center
[Student Name]
Purdue University Global
HS440: Finance for Health Care
Unit 3 Cost Behavior Analysis
[Instructor Name]
[Date]
The center and its expense lines are composite; the finance text and the time-driven costing study cited are real.
The Classification
Each expense line was sorted by asking one question: what would make this cost change? The answer places it as variable, changing with every case; step-fixed, changing only in blocks when capacity is added; or fixed, unchanged across the realistic range of volume (Pink & Song, 2020).
Variable, per case:
1. Disposable supplies, including biopsy forceps and snares: 118 dollars.
2. Sedation drugs: 32 dollars.
3. Linen and reprocessing chemicals: 18 dollars.
Total variable cost: 168 dollars per case, or 977,760 at last year's 5,820 cases.
Step-fixed:
4. Procedure room staffing: 2,100 dollars per room-day, 1,050,000 for 500 room-days. It rises only if a room opens on an added day, such as a Saturday.
Fixed for the year:
5. Management and administration: 420,000.
6. Rent: 360,000.
7. Scope service contracts: 290,000.
8. Depreciation: 410,000.
9. Allocated hospital overhead: 640,000.
10. Information technology and other: 240,000.
Total fixed and step-fixed: 3,410,000.
What Happens to Average Cost
Average cost per case equals fixed cost divided by cases, plus 168.
At 5,000 cases: 682 plus 168, about 850 dollars. At 5,820 cases, last year: 586 plus 168, about 754 dollars. At 6,000 cases, every slot filled: 568 plus 168, about 736 dollars.
Filling the last 180 empty slots would cut average cost by about 18 dollars a case without changing a single price, because the fixed costs are already paid.
Why the Average Misleads for Decisions
The average cost of 754 dollars is useful for pricing contracts over a whole year, but it is the wrong figure for deciding whether to take one more case. An extra case adds 168 dollars of cost, not 754. A Medicaid case paying 380 dollars looks like a loss at average cost and is a gain of 212 dollars at incremental cost, as long as a slot is empty (Zelman et al., 2014).
Lines That Are Harder to Classify
Allocated hospital overhead is fixed for the center but is a share of the parent hospital's costs, set by a formula the center does not control. If the center closed, most of that 640,000 would be spread to other departments rather than disappear, so it should not count as a saving in any decision about whether to keep the center open. Depreciation is fixed and noncash. Scope service contracts are fixed by contract term but would rise if scopes were added. Time-driven costing, which charges each patient for the minutes of staff and equipment time actually used, could refine some of these lines, especially staffing, where some time scales with cases and some with room-days (Kaplan et al., 2014).
What the Analysis Means for the Center
Almost four fifths of the center's costs do not move with volume. That makes volume valuable up to capacity, but it also means a shift in payer mix hits the bottom line almost dollar for dollar, since the costs stay while the payments fall. For managers, the practical lesson is that the cheapest way to lower cost per case is to fill empty slots, and the most damaging change is a loss of well-paying patients, since neither moves the fixed costs. The next units use this split to compare the center with its peers and to find its break-even point.
References
Kaplan, R. S., Witkowski, M., Abbott, M., Guzman, A. B., Higgins, L. D., Meara, J. G., Padden, E., Shah, A. S., Waters, P., Weidemeier, M., Wertheimer, S., & Feeley, T. W. (2014). Using time-driven activity-based costing to identify value improvement opportunities in healthcare. Journal of Healthcare Management, 59(6), 399-412. https://doi.org/10.1097/00115514-201411000-00005
Pink, G. H., & Song, P. H. (2020). Gapenski's healthcare finance: An introduction to accounting and financial management (7th ed.). Health Administration Press.
Zelman, W. N., McCue, M. J., Glick, N. D., & Thomas, M. S. (2014). Financial management of health care organizations: An introduction to fundamental tools, concepts, and applications (4th ed.). Jossey-Bass.
HS440 Unit 3 instructions, in plain terms
The third unit commonly asks you to classify a department's costs as fixed, variable or step-fixed, explain your reasoning and show how cost per unit changes with volume. A list or table of expense lines sits at the center of most submissions. Marks follow correct classification with a stated test, accurate totals, a worked example of average cost at several volumes and a discussion of what the classification means for decisions. Many sections reward noting lines that are hard to classify and explaining the choice. Use the department's own expense lines. Cite a finance text for the categories and, if possible, a source on more refined costing methods.
How the HS 440 Unit 3 example is put together
The analysis states its test, what would make each cost change, and sorts the lines into three groups with amounts, citing a finance text. Variable costs come to 168 dollars per case, step-fixed staffing to 1,050,000 and fixed costs to the remaining 2,360,000. Average cost per case is worked at three volumes; the highlighted sentence shows the saving from filling the last slots. A section explains why incremental cost, not average cost, decides whether to accept one more case, using a Medicaid example. A section discusses overhead, depreciation and service contracts, citing time-driven costing. The close draws the managerial lesson and links forward to peer comparison and break-even.
HS440 Unit 3 rubric: what earns full points
Cost behavior analyses are typically graded on correct classification, sound reasoning, accurate calculation and the link to decisions. Classification and reasoning usually decide most of the grade, since a cost placed in the wrong group distorts every later calculation. Calculation credit covers totals and average cost at several volumes. The decision link earns points when the analysis shows how incremental cost differs from average cost and why that matters. Discussion of hard-to-classify lines is rewarded as evidence of judgment. Clear lists, consistent units and citations to a finance text complete the work most graders expect. A sentence explaining why the chosen volumes are realistic for the department keeps the average cost figures meaningful.
HS440 Unit 3 help: mistakes that cost points
A frequent error is calling salaries variable because they are large, when room staffing does not change with each patient. Another is using average cost to judge whether one more case is worth taking. Some students forget step costs, which change only when capacity is added. Others classify overhead as variable because it appears on every case's cost report. Showing only one volume hides how average cost moves. If your department is different, perhaps a laboratory or a rehabilitation unit, list its expense lines and amounts, and each can be sorted with the same question about what makes it change. A classification table without amounts gives the grader nothing to check against the department's totals.
Get an HS440 Unit 3 example written to your instructions
Expense lines, volume data and the staffing pattern described in the Unit 3 case are what the sort needs, alongside the assignment wording and grading rubric. Each cost receives a behavior label and a reason, average cost is recomputed across the range the data supports, and step points are priced. Returned in 24-48h, the first one at no cost. The paper above is an original model document written by our desk, not a submitted student paper and not an official Purdue University Global document.
More HS440 papers and BS in Health Science samples
- HS440 Unit 1: Payer Mix Discussion Post
- HS440 Unit 2: Financial Statement Review
- HS440 Unit 4: Ratio Analysis
- HS440 Unit 5: Operating Budget Build
- HS440 Unit 6: Variance Report
- HS440 Unit 7: Seminar Reflection
- HS440 Unit 8: Break-even Analysis
- HS440 Unit 9: Capital Request Memo
- HS440 Unit 10: Financial Management Report
- HS450 Unit 3: SWOT Analysis
- HS420 Unit 3: Workflow Analysis
- HS460 Unit 3: Scope Statement
- HS345 Unit 3: Data Display Critique
HS440 Unit 3 questions, answered
Is nursing salary a fixed or variable cost?
It depends on how the department schedules. Where nurses are booked by shift regardless of how many patients arrive, their cost is fixed within a period; where staffing flexes daily with the census, part of it behaves as variable. The sample treats shift-scheduled nursing as fixed and says so, which is the kind of stated judgment HS440 rubrics tend to reward.
Why does average cost per case fall as volume rises?
Because the fixed block, 3,410,000 dollars here, is spread over more cases. At 5,000 procedures each carries 682 dollars of it; at 6,000, about 568. Variable cost per case stays at 168 throughout. That is also why average cost is a poor guide to what one extra case costs, which is only the variable amount.
Where does an allocated overhead charge belong?
From the department's point of view it is usually fixed, since the amount is set by the parent's allocation method rather than by the department's own volume. The sample lists it on a separate line, classifies it as fixed and notes that the center's manager cannot change it, a distinction later units rely on when judging performance.
Where can I find a free HS440 Unit 3 sample paper?
The whole Unit 3 analysis is here, sorting a composite endoscopy center's costs by how they respond to volume.
What is a step-fixed cost?
One that holds steady while volume moves within limits, then rises in a block when capacity grows, as when a procedure room opens for an extra day and needs its own team.