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Assume that patient demand, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending June 3 0
Assume that patient demand, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending
June remain the same as for the year ended June Prepare a schedule of Pediatrics' increase in revenue
and increase in costs for the year ending June x Determine the net increase or decrease in Pediatrics' earnings from
the additional beds if Pediatrics rents this extra capacity from Delaware Medical Center. Do not round intermediate
calculations. Round your final answer to the nearest whole number. Enter an increase in earnings as a postive amount or a
decrease in earnings as a negative amount.
DELAWARE MEDICAL CENTER
Computation of Change in Earnings From Rental of Additional Beds
For the Year Ended June x
Increase in revenue
Increase in expenses: Delaware Medical Center operates a general hospital. The medical center also rents space and beds to separately owned entities rendering specialized services, such as Pediatrics and Psychiatric Care. Delaware 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. Delaware Medical Center charged the following costs to Pediatrics for the year ended June x:
Patient Days variable Bed Capacity fixed
Dietary $
Janitorial $
Laundry
Laboratory
Pharmacy
Repairs and maintenance
General and administrative
Rent
Billings and collections
Total $ $
During the year ended June x Pediatrics charged each patient an average of $ per day, had a capacity of beds, and had revenue of $ million for days. In addition, Pediatrics directly employed personnel with the following annual salary costs per employee: supervising nurses, $; nurses, $; and aides, $
Delaware Medical Center has the following minimum departmental personnel requirements, based on total annual patient days:
Annual Patient Days Aides Nurses Supervising Nurses
Up to
to
to
Pediatrics always employs only the minimum number of required personnel. Salaries of supervising nurses, nurses, and aides are therefore fixed within ranges of annual patient days.
Pediatrics operated at percent capacity on days during the year ended June x Administrators estimate that on these days, Pediatrics could have filled another beds above capacity. Delaware Medical Center has an additional beds available for rent for the year ending June x Such additional rental would increase Pediatrics fixed charges based on bed capacity. In the following requirements, ignore income taxes.
Required:
Calculate the minimum number of patient days required for Pediatrics to break even for the year ending June x if the additional 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 x
Assume that patient demand, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending June x remain the same as for the year ended June x Prepare a schedule of Pediatrics increase in revenue and increase in costs for the year ending June x Determine the net increase or decrease in Pediatrics earnings from the additional beds if Pediatrics rents this extra capacity from Delaware Medical Center.
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