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  • Apr 17, 2004, 04:43 PM
    ecsmith
    HELP!!
    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
  • Apr 17, 2004, 08:11 PM
    viking
    Re: HELP!!
    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.
  • Apr 18, 2004, 06:30 AM
    ecsmith
    Re: 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.
  • Apr 19, 2004, 02:47 PM
    viking
    Re: HELP!!
    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.
  • May 24, 2004, 10:07 PM
    matrix
    Re: HELP!!
    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

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