Question: Hospital Costs and Pricing Olympia Hospital has overall variable costs of 25% of total revenue and fixed costs of $45 million per year.
1. Compute the break-even point expressed in total revenue.
2. A patient-day is often used to measure the volume of a hospital. Suppose there are to be 37,500 patient-days next year. Compute the average daily revenue per patient-day necessary to achieve the break-even total revenue computed in item 1.