A B C D E F G H K L M N o Q R S U 1 2 Azorean Hospital operates a general hospital but rents space to separately owned entities rendering specialized services such as pediatrics and psychiatry. 3 Helping Hospital charges each separate entity for patients' services (Meals and laundry) and for administrative services (billings and collections). Space and bed rentals are fixed charges for the year, based on bed capacity rented to each entity. 4 5 6 7 8 9 10 11 12 Helping Hospital charged the following costs to Pediatrics for the year ended June 30, 2019. Patient Services Bed Capacity (Variable cost) (Fixed Cost) Dietary $500,000 Janitorial $63,000 Laundry 200,000 Laboratory 300,000 Pharmacy 257,000 Repairs and 30,000 maintenance General and 1,300,000 administrative Rent 1,500,000 Billings and 225,000 collections Total $1,482,000) $2,893,000 13 14 15 16 17 18 19 20 21 In addition to these charges from Helping Hospital, Pediatrics incurred the following personnel costs. Annual Salariesthese salaries are fixed Supervising $100,000 nurses Nurses 440,000 Assistants 150,000 Total $690,000 22 23 24 25 26 27 During the year ended June 30, 2019, Pediatrics charged the following per day to patients and generated the following annual revenue: 28 $600 daily revenue charge to patient for services 29 $6,000,000 Total Revenues A B DE F G H 1 J K L M N P Q R S T 2 1 Prepare a contribution income statement for Pediatrics for the year ended June 30, 2019. 3 4 Pediatrics 5 Contribution Income statement 6 For the year ended June 30, 2021 7 8 Revenue 9 Less Variable Costs: 10 Patient Services 11 Contribution Margin 12 Less Fixed Costs: 13 Bed Capacity costs 14 Personnel costs 15 Profit 16 17 2. Calculate the number of patient-days that Pediatrics generated in revenue for the year ended June 30, 2019. 18 19 Patient days 20 21 3. Compute the contribution margin per patient days generated for the year ended June 30, 2019. 22 23 Contribution Margin per patient days 24 25 4. Calculate the minimum number of patient-days required for Pediatrics to break even for the upcoming year June 30, 2020. Assume that revenue per patient-day, cost per patient-day, 26 cost per bed and salary rates for this upcoming year June 30, 2020, remain the same as for the year ended June 30, 2019. 27 28 Patient days 29 30 5. Calculate the operating leverage ratio. 31 32 Operating leverage ratio 33 34 6. Calculate the percentage increase in income based on the increase in sales given in part 1 requirement worksheet using the operating leverage ratio. 35 36 Increase income using the operating leverage 37 38 7. Prepare a contribution income statement showing the projected 2020 revenue and costs if the demand for patient days increases in 2020 to the projected increase stated in #6. 39 40 Pediatrics 41 Contribution Income statement 42 For the year ended June 30, 2020 43 44 Revenue 45 Less Variable Costs: 46 Patient Services 47 Contribution Margin 48 Less Fixed Costs: 49 Bed Capacity costs 50 Personnel costs 51 Profit 52
