Reference no: EM13576301

Your nursing home defines output as a patient day. Its present volume is 26,000 patient days. The average cost per day is $90.00. Present revenues and costs are presented below:

Revenues

• Charge Patients (6,000 Patient Days) $750,000
• Fixed-Price Patients (20,000 Patient Days) $1,800,000
• Total Net Revenues $2,550,000

Costs

• Fixed Costs $1,170,000
• Variable Costs ($45/PD) $1,170,000
• Total ($90/PD) $2,340,000

Using this information, answer the following two questions:

1.What is the break-even in patient days for this nursing home, assuming no profit is required?
2. If volume goes up 10% to 28,600 patient days and payer mix is unchanged, what will net income be?