1. A not-for-profit acute care facility, has the following cost structure for its inpatient services, and expects to have a patient load of 15,000 inpatient days next year:
Fixed costs $10,000,000
Variable cost per inpatient day 200
Charge (revenue) per inpatient day 1,000
a. What is the hospital's breakeven point?
b. What is the volume required to provide a profit of $1,000,000? A profit of $500,000
c. Assume that 20% of the hospital's inpatient days come from a managed care plan that wants a 25% discount from charges. Should the hospital agree to the discount proposal?