Economic Evaluation problem 1 The following information has been gathered on the costs and effectiveness of...
The following information has been gathered on the costs and effectiveness of the two treatments, A and B. In this problem, costs and consequences are not discounted. Treatment A Treatment B Mortality rate 2% 5% Life expectancy for survivors 30 years 20 years Initial treatment cost $20,000 $10,000 Follow up costs, year 1 $5,000 $1,000 Annual follow up costs, all subsequent years $1,000 $500 a. What is the total cost for the survivors receiving treatment A? $54,000 For decedents (assuming...
The following information has been gathered on the costs and effectiveness of the two treatments, A and B. In this problem, costs and consequences are not discounted. Treatment A Treatment B Mortality rate 2% 5% Life expectancy for survivors 30 years 20 years Initial treatment cost $20,000 $10,000 Follow up costs, year 1 $5,000 $1,000 Annual follow up costs, all subsequent years $1,000 $500 Calculate the incremental cost and incremental benefit of the treatment alternatives. DC = DE = What...
You have the following table of costs and benefits for alternative treatments Treatment # Cost Effectiveness (life years gained) 1 100000 5 2 200000 3 3 400000 10 4 500000 20 A. Which treatment(s) if any, is strongly dominated? B. Which treatment(s) if any is weakly dominated? C. Calculate incremental cost effectiveness ratios. D. Assuming that a life year is considered to be worth up to 100000, which interventions would you choose, in the absence of budgetary constraints? E. How might budgetary constraints affect your...
Consider two treatments for lung cancer: (1) radiation and chemotherapy and (2) immunotherapy. Treatment 1 costs $30,000. Treatment 2 costs $75,000. With treatment 1, there is a 75% chance the patient will be alive in year 1 and a 50% chance in year 2, but the patient will die in year 3. The quality of life is poor with treatment 1, 50% of full health in both years. With treatment 2, there is 50% chance of being alive in year...
2.Cost-effectiveness Analysis Amoria Phlebitis is a fictional illness from The Simpsons that causes sharp stabbing pains to the stomach and arms and temporary loss of vision. A 25-year-old patient diagnosed with this condition has an expected lifespan of 35 more years, during which they will continue to deal with these symptoms. Two new treatments (surgery and medication) have recently been proposed as alternatives to the current solution (no treatment). Medication prevents the disease from getting worse and will extend the...
Flower Co. has provided you with the following information for utility costs for the past 5 months: Month January February March April May Units Produced 1,000 1,200 800 900 1,300 Utility Cost 1,200 1,300 1,100 1,000 1,450 Assume an equation to estimate mixed costs is Y=500+.5(x). What is the estimated total cost if 1,200 units are produced? | a) 1,100 b) 500 c) 1,000
Assume that a radiologist group practice has the following cost structure: Fixed costs $500,000 Variable cost per procedure $25 Charge (price) per procedure $100 Furthermore, assume that the group expects to perform 7,500 procedures in the coming year. a. Construct the group’s base case projected P&L statement. (See exhibit 5-5). b. What is the group’s contribution margin? c. What is the group’s breakeven point in volume? d. What volume is required to provide a pretax profit of $100,000? e. Complete...
Problem Set 7 Cost-Benefit Analysis 1.) The Los Angeles area has long been plagued by urban smog. Suppose that one of several ozone-reducing policy options is being evaluated by economists using benefit-cost analysis. a. Since the policy will be implemented over time, economists assume that per resident benefits will accrue in increments of $500 (in real terms) at the end of each of the next three years. Find the present value of benefits (PVB) in nominal terms for each resident,...
Assume that a radiologist group practice has the following cost structure: Fixed costs $500,000 Variable cost per procedure $25 Charge (price) per procedure $100 Furthermore, assume that the group expects to perform 7,500 procedures in the coming year. Part A a. Construct the group’s base case projected P&L statement. (See exhibit 5-5). b. What is the group’s contribution margin? c. What is the group’s breakeven point in volume? d. What volume is required to provide a pretax profit of $100,000?...
14) Switsdorf Company has the following information available for variable overhead costs. Direct labor hours are the cost driver for variable overhead costs. Actual variable overhead costs Standard variable overhead costs Actual direct labor hours Standard direct labor hours per unit Units produced $5,120 $3.00 per hour 2,000 hours 3 hours 1,000 What is the variable overhead efficiency variance? A) $2,000 Favorable C) $1,000 Favorable B) $3,000 Favorable D) $2,000 Unfavorable
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