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What is the new maximum amount of fixed costs ohs incur

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Reference no: EM132696774

The Oakland Homeless Shelter (OHS) provides temporary lodging, food and medical services for homeless citizens in the city of Oakland. OHS's chief financial officer is trying to assess the monthly break-even point for the shelter.

The shelter has monthly fixed costs of $30,000. The shelter receives $35 per individual sheltered per day from the city of Oakland and incurs $15 in variable cost per individual sheltered per day.

Note: All questions below are independent of each other. Do not carry forward any assumptions from previous questions unless the questions instructs you to do so.

Question 1: Calculate the monthly quantity of homeless individuals OHS needs to shelter in order to break even. (note: in order to ease calculations for this question and all questions below, assume that one individual who stays multiple days at the shelter counts as multiple "homeless individuals", i.e. an individual who stays 5 days counts as 5 "homeless individuals")

Question 2: Suppose that the city of Oakland requires OHS to earn a modest surplus of $2,000 per month in order to shield against sudden cost increases, temporary funding shortages or spikes in volume. What quantity of individuals must OHS shelter each month to meet this surplus requirement?

Question 3: Suppose instead that the city of Oakland's regulations prohibit homeless shelters from exceeding a monthly deficit of $1,500 (the maximum deficit any shelter can incur is $1,500 per month). What is the minimum quantity of individuals OHS must shelter each month in order to comply with this regulation?

Question 4: Supposed instead that in addition to receiving per-diem funding from the city of Oakland, OHS also receives a fixed monthly grant of $4,000 from Alameda County. Re-calculate the monthly break-even quantity of individuals to be sheltered.

Question 5: Suppose instead that, due to budget cuts, the city of Oakland lowers the amount paid per sheltered individual per day to $30. What is the new maximum amount of fixed costs OHS can incur each month in order to break even?

Reference no: EM132696774

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