ACC 206 Week 3 Problem 4 Break-even and other CVP relationships (Updated October 2013).

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Break-even and other CVP relationships

Pine Hospital has average revenue of $190 per patient day. Variable costs are $50 per patient day; fixed costs total $4,620,000 per year.

a. How many patient days does the hospital need to break even?

b. What level of revenue is needed to earn a target income of $560,000?

c. If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)?