General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:
Fixed costs.....................................$10,000,000
Variable cost per inpatient day........................$200
Charge (revenue) per inpatient day................$1,000
The hospital expects to have a patient load of 15,000 inpatient days next year.
1. Construct the hospital's base case projected P&L statement.
2. What is the hospital's breakeven point?
3. What volume is required to provide a profit of $1,000,000? A profit of $500,000?