# Question 2

Breakeven Point= Fixed Cost/Contribution Margin

Fixed Cost Bed capacity Because I'm assuming our Annual Patient Days is 20,000 (\$6,000,000/\$300), I went with the first option in the table (up to 21,900), so 20 Aides, 10 Nurses, and 4 Supervising Nurses Aides Nurses Supervising Nurses TOTAL

Fixed Cost Contribution Margin= Sales - Variable Cost

Variable Cost I don't believe we can just take a total variable cost, but rather we need to break it by number of patient days. Total variable cost \$2,000,000/20,000 (6,000,000/\$300), that's \$100 per patient day

Our revenue per patient Therefore our unit contribution margin (page 326 and 327 in our textbook) per patient day CM= \$300-\$100= \$200 Now for our Breakeven Point:

Question 3 If additional 20 beds added for 90 days (100% capacity on 90 days) :

Increase in revenue

666.67 (expenses) = If pediatrics rents this extra capacity from Melford Hospital for 20 beds.800 patient days (no additional staffing needed) Total Expenses \$966.000 (revenue for additional 20 beds rental) .Variable Costs = Total Contribution Margin .\$1. Schedule of Increase Patient Days Revenue .20 additional beds * 90 days * \$300/ day Increase in costs Fixed Expenses \$2.33 * 20 add.000 = Total of 21.246.67 + \$180. they would actually experience the net decrease in their earnings.000/60 beds = \$48. Beds Variable Expenses 20 additional beds * 90 Days * \$100 (total variable cost/patient day) Salaries expenses: Annual patient days 20 additional beds for 90 days = 1800 additional patient days 1800 + 20.900.333.Fixed Costs = Operating Profit .666.000 = \$540.

000*20 \$20. per bed) \$3.380.00 \$100.000*10 \$25.\$2.900 patient days to break even .000 \$9.000*4 \$180.00 \$3.380.000.000.000.000/\$200=16.00 \$200.00 \$480.00 \$300 (per day.900.000.000.

00 \$1.380.00 \$48.000.000 100% \$2.\$540.000 66% \$3.180.33 per bed \$966.666.67 2002 2003 Amount Percent Amount Percent 20.67 -\$606.000.000 66% \$4.666 \$620.800 \$6.000 33% \$4.000 100% \$6.000 33% \$2.000 21.360.67 \$ 180.146.000.540.000 \$ 13.666.334 .333.000.346.666.000.000 \$ 4.