Question

The Pediatric Department at Wymont General Hospital has a capacity of 90 beds and operates 24hours a day every day. The measure of activity in the department is patient-days, where one patient-day represents one patient occupying a bed for one day. The average revenue per patient- day is $400 and the average variable cost per patient-day is $240. The fixed cost of the department (not including personnel costs) is $1,000,000. The only personnel directly employed by the Pediatric Department are aides, nurses, and supervising nurses. The hospital has minimum staffing requirements for the department based on total annual patient-days in Pediatrics. Hospital requirements, beginning at the minimum expected level of activity, follow: Nurses Aides 21 Supervising Nurses Annual Patient-Days 10,000-14,000 14,001--17,000 17,001-23,725 23,726-25,550 25,551-27,375 27,376-29,200 + tono These staffing levels represent full-time equivalents, and it should be assumed that the Pediatric Department always employs only the minimum number of required full-time equivalent personnel. Average annual salaries for each class of employee are: aides, $45,000; nurses, $60,000; and supervising nurses, $84,000. Required: 1. Compute the total fixed costs (including the salaries of aides, nurses, and supervising nurses) in the Pediatric Department for each level of activity shown above (i.e., total fixed costs at the 10,000–14,000 patient-day level of activity, total fixed costs at the 14,001-17,000 patient-day level of activity, etc.). 2. Compute the minimum number of patient-days required for the Pediatric Department to breakeven. (Hint: Divided total fixed costs in each level by unit contribution margin to see if the required B.E unit sales is in that patient-days range)

Answer 1

Fixed costs are no matter those costs which remain same irrespective of the change in volume of patients. Breakeven point is the point where there is no profit or no loss. Fixed cost here is sum of salaries of aides, salaries of nurses and supervising nurses salaries.

Headings >>>>1	2	3	4	5	6	7	8	9	10	11	12	13	14	15
Computation >>>			2*3			5*6			8*9	4+7+10		11+12		13/14
Annual Patient Day	Aides	Per Aide Cost	Total Aides Cost	Nurses	Per Nurse Cost	Total Nurses Cost	Supervising Nurses	Per Surpervisor Cost	Total Supervising Nurses Cost	Total Staffing Cost	Other Fixe Cost	Total Fixed Costs	Contribution per patient day	Breakeven Patient Days
10000 - 14000	21	45,000	945,000	11	60,000	660,000	4	84,000	336,000	1,941,000	10,00,000	2,941,000	160	18,381.25
14001 - 17000	22	45,000	990,000	12	60,000	720,000	4	84,000	336,000	2,046,000	10,00,000	3,046,000	160	19,037.50
17001 - 23725	22	45,000	990,000	13	60,000	780,000	4	84,000	336,000	2,106,000	10,00,000	3,106,000	160	19,412.50
23726 - 25550	25	45,000	1,125,000	14	60,000	840,000	5	84,000	420,000	2,385,000	10,00,000	3,385,000	160	21,156.25
25551 - 27375	26	45,000	1,170,000	14	60,000	840,000	5	84,000	420,000	2,430,000	10,00,000	3,430,000	160	21,437.50
27376 - 29200	29	45,000	1,305,000	16	60,000	960,000	6	84,000	504,000	2,769,000	10,00,000	3,769,000	160	23,556.25

Average Revenue per patient day = 400

Average Variable cost per patient day = 240

Contribution per patient day = 400-240 =160

As total breakeven patient days 19412.50 falls between range of 17001 to 23725, this is the point, where there is actual breakeven.

Hence. between 17000 to 23725 Patient Days is breakeven point.

kindly upvote