Reference no: EM13728290
Your firm, General Hospital is a not-for-profit, acute care facility which has the following cost structure for its inpatient services. Your job is to determine based on your extensive knowledge of Cost behaviour and profit analysis theory and concepts what solutions you would recommend to the Hospital CEO based on the following:
Fixed costs $10,000,000
Variable cost per inpatient day $200
Charge (revenue) per inpatient day $1,000
Furthermore, assume that the Department expects a patient load of 15,000 inpatient days in coming year.
a. Construct the Hospital’s base case projected P & L statement
b. What are the Hospital’s contribution margin and its breakeven point?
c. What volume is required to provide a profit of $1,000,000? A profit of $500,000?
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