Assume your nursing home defines output as a patient day. Its present volume is 26,000 patient days. The average cost per day is $90.00. Using the present revenues and costs presented below:

What is the breakeven inpatient days for this nursing home, assuming no profit is required?

If volume goes up 10 percent to 28,600 patient days and payer mix is unchanged, what will net income be?

What is the importance of determining cost behavior and identifying controllable costs in this type of break-even analysis?

Revenues:

Charge Patients (6,000 Patient Days) $750,000

Fixed-Price Patients (20,000 Patient Days) $1,800,000

Total Net Revenues 2,550,000

Costs:

Fixed Costs $1,170,000

Variable Costs ($45/PD) 1,170,000

Total ($90/PD) 2,340,000

Net Income $210,000