Westmount Retirement Residence Case Essay Example | Topics and Well Written Essays - 1500 words

Westmount Retirement Residence Case - Essay Example The new costing system is based on the three suite options and on the three levels of medical needs of the residents. The costs of supportive services have been allocated based on the level of medical needs of the residents. Half the costs of facilities have been allocated based on square feet area of the three different suite options. The pricing recommendations, based on the new costing system have been made to Helen Rosewell in the final section of the main report. The recommended pricing is based on the new costing system. It is also recommended that spouses living in one bedroom should be charged twice the monthly rates. The biggest limitation of the current costing model at Westmount is that it does not give a clear picture of how much each of the services that are being offered at Westmount cost. The pricing system charges the same price per month from the residents irrespective of the services used by them. This pricing is only based on the type of residence being used by the residents. The costing model does not reflect the level of medical care and service required by the individual clients. The price differentiation is based solely on the size of the accommodations. The model is also is based on the implicit assumption that a resident having a 25% larger accommodation is also using 25% more services of Westmount. The costing system does not show any difference between patients requiring different levels of medical needs. There are usually three categories of residents at Westmount: those requiring no medical need, those requiring medium medical need and those requiring high medical needs. The biggest drawback of this costing system is that it is treating all the costs as fixed or period costs. The costing system is unable to differentiate between fixed costs and variable costs. All the costs are treated as periodic costs and they are charged to the expected number of residents.