Question

UTSW Hospitals reported the following account balances (in thousands) for their budgeting cycle:

Administrative expenses         $ 60,000                                  

Net patient revenue                  630,000

Marketing expenses                   44,000

Salaries & Benefits expenses  475,000

How much is the Operating Margin % budgeted for UTSW Hospital ?

		9.5%
		8.1%
		3.2%
		5.9%

Answer 1

Calculation of Operating Income
Net patient revenue		630,000
Expenses:
Administrative expenses	60,000
Marketing expenses	44,000
Salaries & Benefits expenses	475,000
Total expenses		-579,000
Net Operating income		$51,000

Operating margin = Net Operating income/New patient revenue

= 51,000/630,000

= 8.1%

the Operating Margin % budgeted for UTSW Hospital = 8.1%

Second option is correct.

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