(Answered) Fixed Cost Analysis

Company, a not-for-profit acute care facility has this cost structure for its inpatient services;Fixed costs $10,000,000;Variable cost per inpatient day $200;Charge (revenue) per inpatient day $1,000;The hospital expects to have a patient load of 15,000 inpatient days next year.;1. Construct hospital???s base case projected P&L statement;2. Hospital???s break-even point;3. What volume is required to provide a profit of $1,000,000. A profit of $500,000?;4. Assume that 20 percent of the hospital???s inpatient days come from a managed care plan that wants a 25 percent discount from charges. Should the hospital agree to the discount proposal?;Managers of a hospital are setting the price on a new outpatient service. Data listed;Variable cost per visit $5.00;Annual direct fixed costs $500,000;Annual overhead allocation $50,000;Expected annual utilization 10,000 visits;1. What per visit must be set for the service to break even? To earn annual profit of $100,000.;2. Repeat Part 1, assume variable cost per visit is $10;3. Return to the data given in problem. Again repeat Part 1, but assume direct costs are $1,000,000;4. Repeat Part 1 assuming both a $10 variable cost and $1,000,000 in direct fixed costs
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Fixed Cost Analysis

 


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