The Oakville Medical Center operates a general hospital but rents space and beds to separate entities for specialized areas such as pediatrics, maternity, and psychiatry. The medical center charges each separate entity for common services to its patients such as meals and laundry and for administrative services such as billing and collections. All uncollectible accounts are charged directly to the entity.

Space and bed rentals are fixed for the year.

During the entire year ended June 30, 19X1, the Pediatrics Department at the Oakville Medical Center charged each patient an average of $240 per day, had a capacity of 60 beds, operated 24 hours per day for 365 days, and had revenue of

$4,552,000.

Expenses charged by the medical center to the Pediatrics Department for the year ended June 30, 19X1, were as follows:

The only personnel directly employed by the Pediatrics Department are supervising nurses, nurses, and aides. The medical center has minimum personnel requirements based on total annual patient days. These requirements, beginning at the minimum expected level of operation follow:

The staffing levels above represent full-time equivalents, and it should be assumed that the Pediatrics Department always employs only the minimum number of required full-time equivalent personnel.
Annual salaries (including payroll taxes and fringe benefits) for each class of employee follow: supervising nurses, $72,000; nurses, $52,000; and aides, $20,000.
Salary expense for the year ended June 30, 19X1, for supervising nurses, nurses, and aides was $288,000, $676,000, and $440,000, respectively.
The Pediatrics Department operated at 100 percent capacity during 111 days for the past year. It is estimated that during 90 of these capacity days, the demand averaged 17 patients more than capacity and even went as high as 20 patients more on some days. The medical center has an additional 20 beds available for rent for the year ending June 30, 19X2.
Instructions 1. Calculate the minimum number of patient days required for the Pediatrics Department to break even for the year ending June 30, 19X2, if the additional 20 beds are not rented. Patient demand is unknown, but assume that revenue per patient day, cost per patient day, cost per bed, and employee salary rates will remain the same as for the year ended June 30, 19X1.
2. Assuming that patient demand, revenue per patient day, cost per patient day, cost per bed, and employee salary rates for the year ending June 30, 19X2, remain the same as for the year ended June 30, 19X1, should the Pediatrics Department rent the additional 20 beds? Show the annual gain or loss from the additional beds.

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Dietary Janitorial Laundry Amount Allocated on Basis of: Laboratory, other than direct charges to patients Pharmacy Repairs and maintenance General administrative services Patient Days Bed Capacity $ 171,808 $ 51,200 112,000 191,200 135,200 20,800 28,560 Rent 527.040 1,101,280 Billing and collections. 160,000 Uncollectible accounts expense 188,000 Other 72,192 103,920 $1,051,200 $1,812,000