Response to the following problem:
Children's Hospital predicts variable costs of 70% of total revenue and fixed costs of $42 million per year for 2011.
1. Compute the break-even point expressed in total revenue.
2. In 2011 Children's Hospital expects total revenue of $150 million from 200,000 patient days.
Compute
(a) expected profit for 2011 if costs behave as expected, and
(b) total profit if variable costs in 2011 are 10% greater than predicted.