Finance Cases

Breakeven = Fixed Costs / Patient Day Contribution Margin

Fixed Costs = Fixed Charge + Personnel Costs

Personnel Requirements =

Revenues / Mean Patient Day

(PD) Charge

$6,000,000 / $300 = 20,000 PD

Contribution Margin = Mean PD Charge -- Variable

PD Variable Cost =

$2,000,000 / 20,000 --

Contribution Margin = $300 - $100 = $200

Breakeven = $3,380,000 / $200 = 16,900 Patient Days

2. Net increase or decrease in earnings if 20 extra beds are rented:

Increase in Patient Days = 20 Beds x 90 days = 1,800 PD

Personnel Requirements = Existing PD + New PD

= 20,000 = 1,800

= 21,800 PD [No Change in Staff]

Fixed Costs: $2,900,000 / 60 beds = $48,333 per bed

$48,333 x 20 new beds = $ 966,667

Variable Costs = 1,800 PD x $100 = $ 180,000

Total Increase in Costs = $1,146,667

Increase in Revenue = 1,800 PD x $300 = $ 540,000

Net Decrease in Return = $ 606,667

. . .
Some common words found in the essay are:
Hudson Bay, Direct Labor, PD Charge, Fixed Costs, Bay Division, Flat Fee, Balance Period, Contribution Margin, Deduct Finished-goods, Patient Days, direct labor, hudson bay, contribution margin, direct material, item amount $, transfer price, flat fee, amount $, item amount, costs =, fixed costs, material price variance, direct material price, = 1800 pd, net income 1337500,
Approximate Word count = 991
Approximate Pages = 4 (250 words per page)

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