Use the following information about Hospital X to answer the questions that follow
Use the following information about Hospital X to answer the questions that follow (review chapter 5 for information about formulas used to calculate, and make sure to show all work for full credit)
Fixed Cost = $5,000,000
Variable Cost Per Patient Day = $500
Revenue Per Patient Day = $750
2013 Patient Days = 34.000
1. (1 pt) What are the total costs for the organization?
2. (1 pt) Is the hospital making a profit or loss? What is the profit loss?
3. (1pt) What is the total contribution margin at 34,000 patient days?
Homework Answers
1) Calculation of total costs:
Total cost= fixed cost+ variable cost
Total cost= 5000000+(500*34000)
Total cost= $22000000
2) calculation of profit/loss:
Profit = revenue- total cost
Profit= (750*34000)-22000000
Profit= $3500000
3) Calculation of contribution:
Contribution= no. Of patients*(revenue-variable cost)
Contribution= 34000*(750-500)= $8500000
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