Organization of Practice - My Cards

Question 1

How much of the true total cost of a product does HOLDING COSTS account for?

Answer 1

8% - 15%

Question 2

How much of the true total cost of a product do HOLDING COSTS + ORDERING COSTS account for?

Answer 2

25% - 35%

Question 3

What mark-up would result in breaking even on the sale of a product?

Answer 3

35% - 40% mark-up

Question 4

Re-Order Point (formula to determine minimum OH to re-order)

Answer 4

Avg #units used daily x #days lead time

Question 5

Re-Order Quantity (formula to determine how much to order)

Answer 5

Avg #units used daily x turnover goal in days

Turnover goal in days could be how often you want to order or the # of days you want to hold on to the product before selling it all.

Question 6

How often should you order the top 20% of products?

Answer 6

Monthly

Question 7

Average Inventory Turnover Ratio

Answer 7

Goal should be 8-12 turns/year

The higher the ITR, the tighter the inventory control.

Question 8

Sales Price of Product (equation)

Answer 8

Sales Price = Fixed costs + Variable costs + Profit

*Fixed costs = unit cost, estimated ordering + holding costs

*Variable costs = DVM production and associated payroll costs and taxes

Average profit is approximately 12%.

Question 9

Break Even Analysis (Equipment)

Answer 9

Price of Equipment + support and maintenance / Client cost - cost to produce service = # times service must be performed to break even

Question 10

What percentage of gross revenue should be reserved for replacing or acquiring equipment each year?

Answer 10

1%

Question 11

What is Safe Harbor, as it relates to tax planning?

Answer 11

System of calculating this year’s projected tax based off of last year’s tax.

Question 12

Capital Inventory

Answer 12

Any equipment purchased throughout the life of the practice

Question 13

What are two types of information systems?

Answer 13

Hardware and software