View Full Version : Help!
ecsmith
Apr 17, 2004, 04:43 PM
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
viking
Apr 17, 2004, 08:11 PM
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.
ecsmith
Apr 18, 2004, 06:30 AM
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.
viking
Apr 19, 2004, 02:47 PM
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.
matrix
May 24, 2004, 10:07 PM
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