Melfotxl Hospital operates a general hospital, but rents space and beds to separatelyowned entities rendering specialized services such as pediatrics and psychiatric care_ Meiford charges each separate entity for common services such as patients' meals and laundry and for administrative services such as billings and collections. Space and bed rentals are fixed charges for the year, based on bed capacity rented to each entity Meiford charged the following costs to pediatrics for the year ended June 30, 19X2:

REQUIRED:
1 What is the strategic role of CVP analysis for Melford hospital?
2 Determine the minimum number of patient days required for pediatrics to breakeven for the year ending June 30, 19X3, 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 salary rates will remain the same as for the year ended June 30, 19X2. ,.
3 Assume that patient demand, revenue, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending June 30, 19X3 remain the same as for the year ended June 30, 19X2. Prepare a schedule of increase in revenue and increase in costs for the year ending June 30, 19X3, in order to detemiine the net increase or decrease in earnings from the additional 20 beds if pediatrics rents this extra capacity from Melford.

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Dietary..... Janitorial Laundry Patient Days (variable) $ 600,000 Bed Capacity (fixed) $ 70,000 300,000 Laboratory Pharmacy 450,000 350,000 Repairs and maintenance. 30,000 General and administrative 1,300,000 Rent 1,500,000 Billings and collections........... Total...... 300,000 $2,000,000 $2.900.000 During the year ended June 30, 19X2, pediatrics charged each patient an average of $300 per day, had a capacity of 60 beds, and had revenue of $6,000,000 for 365 days. In addition, pediatrics directly employed the following personnel: Supervising nurses Nurses..... Aides Annual Salaries $25,000 20,000 9,000 Melford has the following minimum departmental personnel requirements based on total annual patients days: