Atlantic City Hospital owns and operates a local hospital. It also leases unused space, including beds to other businesses that offer related services such as Physical Therapy and Long-Term Care. Atlantic City charges each company for common services provided such as laboratory and xray services. The hospital charged the following costs to Long Term Care for the year ended June 30,2018:

Variable Expenses Fixed Expense

Food Service $560,000.00

Xray Service $71000

Laundry $250,000.00

Lab costs $430,000.00

Repairs and Maintenance $33,000

General and administrative $1,300,000

Rent $1,540,000

Bill and collections $250,000.00

Total $1,800,000.00 $2,944,000

**Variable Expenses are chargedfor patient days. Fixed expenses are charged based on bed capacity leased.

During the year ended June 30, 2018, Long Term Care charged each patient an average of $500 per day, had availability of 80 beds and had revenue of $6 million for 365 days. In addition, Long Term Care directly employed personnel with the following annual salary costs per employee: supervising nurses $26,625; nurses $20,200 and cna's $8,500.The hospital has the following minimum departmental personnel requirements, based on total annual patient days:

Annual Patient Days Nurse aid (CNA) Nurses Supervisor Nurses

Up to 20,000 20 10 4

20,001 to 25,000 25 14 5

25,001 to 30,000 31 16 5

Long Term care always employs only the minimum number of supervising nurses and nurses but operates with 5 additional aides than the minimum required by the hospital. Salaries of supervising nurses, nurses and CNA's are fixed within ranges of annual patient days.

Long Term care operated at 100% capacity on 80 days during the year ended June 30, 2018. The hospital estimates that on the 80 days, Long Term care could have filled another 20 beds above capacity. The hospital has an additional 20 beds available for lease for the year ending June 30, 2019. The additional leased beds would increase Long Term care's fixed charges based on bed capacity. (ignore income taxes).

1. Calculate the break-even patient days for Long Term care for the year ending June 30, 2019, assuming 20 extra beds are not leased. Assume all other data and rates from June 30, 2018 remain the same.

2. Determine the net increase or decrease in Long term care's earnings for the year ending June 30, 2019 from the additional beds if Long Term care leased this extra capacity from Atlantic City Hospital. What is the schedule of Long Term care's increase in revenue and increase in costs for the year. The number of additional patient days is based on using the additional beds when at max capacity. Assume patient demand, revenue, variable and fixed rates from June 30,2018 remain the same.

3. Should Long term care lease the additional 20 beds for the year ending June 30, 2019?

4. If max capacity were to increase and the additional beds were needed for more than 80 days at what number of days would they willing to lease the additional 20 beds? Calculate the break-even (patient days) for Long Term care to lease the additional beds. Only consider the revenue and expenses calculated in question #2.