| Summary: | This case describes the sales of Dynamic Medical Solutions (DMS), a medical products supplier (as a retailer of products manufactured by others), whose reimbursements for sales made to customers eligible for Medicare and Medicaid appear to be in violation of government reimbursement guidelines. The case is an illustration of one of the major emerging trends in management accounting: expansion of profitability analysis from cost allocations focused primarily on product costs to sales channels and/or customer types, including the allocation of non-product costs. This real-world case requires students to first understand the dilemma faced by the company, including information regarding certain products and sales channels and related product cost data, departmental processes, and related operating expenses from its latest year of operations. The student’s task is to evaluate alternatives the company should consider with regard to cost allocations to specific products and sales channels along with their resulting impact on product pricing and channel profitability. Students will then be in a position to make recommendations ensuring both qualitative and quantitative compliance with government regulations for Medicare and Medicaid reimbursements.
|
|---|