Question

Given the following cost data, what volume (inpatient days) would County Hospital need in order to...

Given the following cost data, what volume (inpatient days) would County Hospital need in order to earn $500,000 profit? (2 points)

Fixed costs = $45,000,000.
Variable cost per inpatient day = $850. Revenue per inpatient day = $1,450.

a. 45,975 inpatient days b. 50,670 inpatient days c. 75,244 inpatient days d. 75,834 inpatient days

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Homework Answers

Answer #1
Ans. Option d.   75,834   (rounded)
Calculations:
Sales units for desired profit = (Fixed cost + Profit) / Contribution margin per inpatient day
($45,000,000 + $500,000) / $600
$45,500,000 / 600
75833.3333 impatient days
Contribution margin per inpatient day = Revenue per inpatient day - Variable cost per inpatient day
$1,450 - $850
$600
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