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 30, 20x1: Patient Days (variable) $ 520, eee Bed Capacity (fixed) $ 76,898 220, eee 480, eee 340,000 Dietary Janitorial Laundry Laboratory Pharmacy Repairs and maintenance General and administrative Rent Billings and collections Total 31, e90 1,380, eee 1,560,000 210, eee $1,690, eee $2,967,000 During the year ended June 30, 20x5. Pediatrics charged each patient an average of $600 per day, had a capacity of 60 beds, and had revenue of $6 million for 365 days. In addition, Pediatrics directly employed personnel with the following annual salary costs per employee: supervising nurses, $25,200: nurses. $20,100; and aides. $8.700. Delaware Medical Center has the following minimum departmental personnel requirements, based on total annual patient days: Aides Nurses Supervising Nurses Annual Patient Days Up to 22,888 22,281 to 26,828 26,01 to 29,200 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 100 percent capacity on 85 days during the year ended June 30, 20X1. Administrators estimate that on these 85 days. Pediatrics could have filled another 10 beds above capacity. Delaware Medical Center has an additional 10 beds available for rent for the year ending June 30, 20x2. Such additional rental would increase Pediatrics' fixed charges based on bed capacity. In the following requirements, ignore income taxes.) Required: 1. Calculate the minimum number of patient days required for Pediatrics to break even for the year ending June 30, 20x2, if the additional 10 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 30, 20x1. 2. Assume that patient demand, revenue per patient day. cost per patient day, cost per bed, and salary rates for the year ending June 30, 20x2, remain the same as for the year ended June 30, 20x1. Prepare a schedule of Pediatrics' increase in revenue and increase in costs for the year ending June 30, 20x2. Determine the net increase or decrease in Pediatrics' earnings from the additional 10 beds if Pediatrics rents this extra capacity from Delaware Medical Center. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Assume that patient demand, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending June 30, 20x2, remain the same as for the year ended June 30, 20x1. Prepare a schedule of Pediatrics' increase in revenue and increase in costs for the year ending June 30, 20x2. Determine the net increase or decrease in Pediatrics' earnings from the additional 10 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.) Show less DELAWARE MEDICAL CENTER Computation of Change in Earnings From Rental of Additional Beds For the Year Ended June 30, 20x2 Increase in revenue Increase in expenses: Variable charges by medical center Fixed charges by medical center Salaries Total increase in expenses Net change in earnings from rental of additional 10 beds
