Melford Hospital operates a general hospital, but rents space and beds to separately owned entities rendering specialized services such as pediatrics and psychiatry. Melford 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.
Melford charged the following costs to pediatrics for the year ended June 30, 2009:

During the year ended June 30, 2009, 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:

Melford has the following minimum departmental personnel requirements based on total annual patient days:

These staffing levels represent full-time equivalents. Pediatrics always employs only the minimum number of required full-time equivalent personnel. Salaries of supervising nurses, nurses, and aides are therefore fixed within ranges of annual patient days. Pediatrics operated at \(100 \%\) capacity on 90 days during the year ended June 30, 2009. It is estimated that during these 90 days the demand exceeded 20 patients more than capacity. Melford has an additional 20 beds available for rent for the year ending June 30,2010 . Such additional rental would increase pediatrics' fixed charges based on bed capacity.

Required:

(a) Calculate the minimum number of patient days required for pediatrics to break even for the year ending June 30, 2010, 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, 2010.

(b) Assume that patient demand, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending June 30,2010 , remain the same as for the year ended June 30, 2009. Prepare a schedule of increase in revenue and increase in costs for the year ending June 30,2010 , in order to determine 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. 450,000 Pharmacy 350,000 Repairs and maintenance. 30,000 General and administrative.......... 1,300,000 Rent 1,500,000 Billings and collections 300,000 Totals. $2,000,000 $2,900,000 During the year ended June 30, 2009, 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: Annual Salaries Supervising nurses $25,000 Nurses 20,000 Aides 9,000