Revenue budget Batesfield Community Hospital provides medical services for a three- county region. During the last accounting year the hospital's revenue consisted of the following:

The activity measure for each revenue item is indicated in parentheses. Patient days are used to measure activity for medical-surgical services and cardiac care services. Number of lab orders are the activity measure for laboratory revenues. Emergency room and out-patient revenues are related to the number of patient visits to each. The financial manager of the hospital has arrived at each of these activity measures after careful study of the relationships between various activity measures and each type of revenue. Analysis indicates that there is a strong direct relationship between the amount of revenue and the level of activity for each of the revenue classifications.
The financial manager is preparing the revenue budget for the next accounting year and has determined the following data. A rate increase recently approved will increase the revenue per patient-day by $8.50 in medical-surgical and by $9.00 in cardiac care. In addition, laboratory revenue will increase by an average of $1.75 per order, emergency room revenue by an average of $2.00 per patient, and out-patient revenue by an average $3.00 per patient.
Medical-surgical patient days are expected to increase by 12 percent during the next year. A new cardiac care unit in a neighboring hospital will decrease patient days for that unit by about 20 percent. New home construction in the area is expected to increase patient visits in both emergency room and out-patient by 10 percent. Management expects laboratory orders to in- crease 8 percent.

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Medical-surgical (70,000 patient days). Cardiac care (4,200 patient days) Laboratory fees (100,000 lab orders) Emergency room (20,000 emergency room visits) Out-patient (22,500 out-patient visits) Total revenue $ 7,000,000 1,050,000 1,300,000 1,500,000 1,125,000 $11,975,000