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Consider the following cost and revenue data for Shasta Memorial Hospital: Fixed costs = $15,000,000. Variable...

Consider the following cost and revenue data for Shasta Memorial Hospital:
Fixed costs = $15,000,000.
Variable cost per inpatient day = $250.
Revenue per inpatient day = $1,000.
What is the expected profit at a volume of 25,000 inpatient days?

a.

-$3,750,000
b.

$0
c.

$1,750,000
d.

$2,750,000
e.

$3,750,000
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Answer #1
Total revenue (25,000 * $1,000) $25,000,000
(-) Total variable cost (25,000 * $250) $6,250,000
Contribution margin $18,750,000
(-) Fixed costs $15,000,000
Profit $3,750,000

Expected profit at a volume of 25,000 inpatient days is $3,750,000.

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