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Total Cost for Hospital

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Hospital Information

Fixed Cost = 5,000,000

Variable Cost Per Patient Day = $500

Revenue Per Patient Day =$750

2013 Patient Days =34,000

What are the total costs for the organization?

Is the hospital making a profit or loss?  What is the profit/ loss? 

What is the total contribution margin at 34,000 patient days?

What is the volume breakeven in patient days using the cost information given?

Apr 6th, 2015

Total variable costs for 34,000 patient days in 2013 (34,000 x $500)    $17,000,000

 Fixed costs                                                                                                 5,000,000

 Total costs for the organization                                                              $22,000,000

Revenue in 2013 (34,000 x $750)                                                           $25,500,000

Less total costs                                                                                         22,000,000

Profit                                                                                                         $3,500,000

Revenue                                                                                                   $25,500,000

 Less variable costs                                                                                   17,000,000

Total Contribution margin at 34,000 patient days                                      $8,500,000 

Revenue per patient day                               $750

Less variable costs per patient day                500   

Contribution margin per patient day               $250

Breakeven volume in patient days = Fixed costs/Contribution margin per day

                                                         = $5,000,000/$250

                                                         = 20,000

Break even in dollars = 20,000 x $750

                                    = $15,000,000

Apr 6th, 2015

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Apr 6th, 2015

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