8. Break-even analysis and step-fixed costs. (Note: This problem has been adapted from an earlier problem presented by Horngren, which came originally from a CPA exam.)

Wagner Hospital allocates overhead costs to departments such as pediatrics, maternity, psychiatric, and so on. Wagner assigns costs to each separate department for services to its patients (such as lab tests, dietary, and laundry) and for administrative services. For the entire year ended June 30, 2012, the OR at Wagner Hospital charged each patient an average of $980 per operation and had revenue of $1,749,300.

Expenses charged by the hospital to the OR for the year ended June 30, 2012, were as follows:

	Basis of allocation
	Operations	Space
Custodial engineering		$12,800
Laundry	$28,000
Laboratory, other than direct charges to patients	47,800
Pharmacy	83,800
Repairs and maintenance	95,200	7,140
General administration		131,760
Rent		275,320
Finance office	40,000
Bad debt expense	47,000
Other	29,700	25,980
	$371,500	$453,000

The only personnel directly employed by Wagners OR are supervising nurses, scrub nurses, and circulating nurses. The hospital OR staffing is based on total operations. Hospital requirements beginning at the minimum expected level of operations follow:

Annual Number of Operations	Scrub Nurses	Circulating Nurses	Supervising Nurses
10001400	11	6	2
14011700	12	6	2
17012372	12	7	2
23732555	13	8	3
25562738	14	8	3
27392920	15	9	3

The staffing levels above represent full-time equivalents. Annual salaries for each class of employee follow: supervising nurses, $65,000; scrub nurses, $55,000; and circulating nurses, $50,000. The OR has capacity for only 2300 operations per year at the current time.

Calculate the minimum number of operations required for the OR to break even for the year ending June 30, 2012. Patient demand is unknown, but assume that revenue per operation and costs remain at the same rates as last year.