Hello,

Please help! How do I do this problem without fixed cost.

City Hospital has variable cost of 80 million per year. These cost represent approsimately 75% of the total revenue. There are 50,000 patient-days estimated for next year.

a. What is the break-even point expressed in total revenue?

b. What is the average daily revenue per patient necessary to break-even?

How do I figure this out without?

Thanks,
Ebony

Apparently there are no fixed costs associated with this problem so that variable cost = total costs.

Break even is simply where TC=TR.

Let me know if you need more help.

OK
Let's see if I got this?

TC=TR
a.
80,000,000=60,000,000
TR=20,000,000

b.
20,000,00/50,000=40


Ok, how is this.

I am not sure what you are trying to do?

Fo part A:

If VC=TC and breakeven occurs where TC=TR then VC=.75TR THUs the breakeven expressed in terms of TR is .75TR. DO you understand? THe problem said that VC=.75TR.

For part B:

If there are 50,000 patient revenue days and you need to raise 80,000,000 to break even then write the equation 80,000,000=50,000X

solving for X we get: $1600 daily revenue per patient.

Please. Try this!

1. If we have P80M of variable cost which is equivalent to 75% of total revenues... finding out the break-even point in terms of peso sale simply divide the 80M to 75% and we get the total revenue amounting to 106.67M. Multiply the total revenue to 25% which is the resulting difference of 100% and 75% you get the Contribution Margin amounting to 26.67M. Simply the BES= CM - Fixed Cost where profit is equivalent to zero.
So your BES = 26.67M

2. average daily sale per patient to break-even is equal to 533