Morton Medical Institute operates a? 300-bed hospital and offers a number of specialized medical services. Morton?’s hospital facility and equipment are leased on a? long-term basis. The hospital charges $2,000 per patient day. On the basis of past cost? data, Morton has estimated its variable costs as $500 per patient day. Fixed costs are $2,000,000 per month. The?hospital’s administrator has estimated that the hospital will average 5,400 patient days per month.
Requirements
(a) How much will the hopsital need to charge per patient day to break even at this level of activity?
First determine the basic Cost-Volume-Profit (CVP) equation.
Determine the amount the hospital will need to charge per patient day to break even at the current level of activity. (Round answer to the nearest dollar.)
(b) Refer to the original data in the problem. How many patient days must Morton average each month to earn a target profit of $45,000 per month?
determine the formula and calculate how many patient days must Morton average each month to earn a target profit of $45,000 per month. (Round the required unit sales to the nearest whole number.)
