CMA Final · Strategic Cost Management · Benchmarking
Vindhya Hospitals compares its average patient billing time of 45 minutes with the benchmark of 30 minutes. Billing staff cost Rs 600 per hour, and 40,000 patients are billed a year. If the benchmark time is achieved, what is the annual saving in billing staff cost?
The annual saving is Rs 60,00,000. Each bill takes 15 minutes less, which is 0.25 hour, so 40,000 patients save 10,000 hours. At Rs 600 per hour of staff cost, the saving is Rs 60,00,000.
- ARs 30,00,000Correct
- BRs 60,00,000
- CRs 20,00,000
- DRs 40,00,000
Explanation
Time saved per patient = 15 minutes = 0.25 hour. Total hours saved = 0.25 x 40,000 = 10,000 hours. Saving = 10,000 x 600 = Rs 60,00,000. Rs 30,00,000 would use half the gap, so the correct answer is Rs 60,00,000.
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