Case Scenario: St. Mark's Hospital contains 450 beds. The average occupancy rate is 78% per month. In other words, on average, 78% of the hospital's beds are occupied by patients. At this level of occupancy, the hospital's operating costs are $21.10 per occupied bed per day, assuming a 30-day month. This $21.10 figure contains both variable and fixed cost elements.
During June, the hospital's occupancy rate was only 38%. A total of $200,583 in operating cost was incurred during the month.
Requirement 1:
(a) Estimate the variable cost per occupied bed on a daily basis using high-low method. (Round your answer to 2 decimal places. Omit the "$" sign in your response.)
(b) Estimate the total fixed operating costs per month using high-low method. (Omit the "$" sign in your response.)
Requirement 2:
Assume an occupancy rate of 62% per month. What amount of total operating cost would you expect the hospital to incur? (Omit the "$" sign in your response.)
Fixed costs
Variable costs
Total expected costs