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?
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.
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