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    The document contains information about two healthcare organizations: 1) Morton Medical Institute has 300 beds, charges $2,000 per patient per day, and has variable costs of $500 per patient and fixed costs of $2,000,000 per month. It averages 5,400 patients per month. 2) Patterson's Parkas Company has revenue of $30 per unit, costs of $19.50 per unit, and fixed costs of $147,000. It must sell 14,000 units to break even. To earn income of 20% of revenue, it must sell 32,667 units.

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    The document contains information about two healthcare organizations: 1) Morton Medical Institute has 300 beds, charges $2,000 per patient per day, and has variable costs of $500 per patient and fixed costs of $2,000,000 per month. It averages 5,400 patients per month. 2) Patterson's Parkas Company has revenue of $30 per unit, costs of $19.50 per unit, and fixed costs of $147,000. It must sell 14,000 units to break even. To earn income of 20% of revenue, it must sell 32,667 units.

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    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    121 views1 page

    Homework

    Uploaded by

    Anonymous r3AaZy1MCU
    The document contains information about two healthcare organizations: 1) Morton Medical Institute has 300 beds, charges $2,000 per patient per day, and has variable costs of $500 per patient and fixed costs of $2,000,000 per month. It averages 5,400 patients per month. 2) Patterson's Parkas Company has revenue of $30 per unit, costs of $19.50 per unit, and fixed costs of $147,000. It must sell 14,000 units to break even. To earn income of 20% of revenue, it must sell 32,667 units.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    of 1

    Morton Medical Institute

    Beds 300
    Patient fee $ 2,000.00 per day
    Variable Cost $ 500.00 per patient
    Fixed Costs $ 2,000,000.00 per month

    Average Month 5400 patients

    Break Even Units Fixed Costs / Contribution Margin

    Break Even Units (Current)


    2000000/1500 1333.333333333

    Break Even Revenue (Current)


    2000000/75% $ 2,666,666.67

    Question A
    How much will the hospital need to charge to break even at this level of activity?

    5400 = 2000000 / (x-500) $ 870.37 = x

    Questoion B
    Using the original data in the problem, how many patient days must Morton average each month to earn a profit of $45,000 per month?

    x = (2000000 + 45000) / (2000 - 500) x = 1363.333 ~ 1364

    Pattersons Parkas Company

    Revenue = $30 / unit


    Cost = $19.50 / Unit
    Fixed Cost = $147,000

    Question A
    Compute Patterson’s contribution margin per unit and contribution margin ratio
    Unit Price - Unit Cost = $10.50 (Contribution Margin)
    Contribution Margin / Unit Price = 35% (Contribution Margin Ratio)

    Question B revenue
    Determine the number of units Patterson must sell to break even. Prepare a break even graph
    Break Even Units = Fixed Costs / Contribution Margin
    Break Even Units = 147000 / 10.5 $420,000 profit
    Break Even Units = 14000 loss

    14000 units
    Question C
    Determine the sales revenue required to earn income equal to 20% of revenue.
    X = Units
    Price (x) - Cost (x) - Fixed Costs = 20%(Price (x))
    30x - 9.5x - 147000 = .20(30x)
    10.5x -147000 = 6x
    4.5x = 147000
    x = 32666.67 ~ 32667
    32667 * 30 = $980,010

    Question D
    How man units must Patterson sell to generatre an after-tax profit of $109,200 if the tax rate is 35%?
    109200 /.65 = 168000
    168000+147000 / 10.5 = 30000 units

    Question E
    Patterson is considering increasing its advertising expenses by $38,500. How much of an increase in sales units is necessary from expanded advertising to justify this expenditure?

    147000+38500 / 10.5 = 17667 units


    17667 units - 14000 = 3667 increase in units

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