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)			Bed Capacity (fixed)
Dietary	$	600,000
Janitorial				$	70,000
Laundry		300,000
Laboratory		450,000
Pharmacy		350,000
Repairs and maintenance					30,000
General and administrative					1,300,000
Rent					1,500,000
Billings and collections		300,000
Total	$	2,000,000		$	2,900,000

During the year ended June 30, 20x1, Pediatrics charged each patient an average of $300 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, $25,000; nurses, $20,000; and aides, $9,000.

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 22,000	20		10		4
22,001 to 26,000	25		14		5
26,001 to 29,200	31		16		5

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 90 days during the year ended June 30, 20x1. Administrators estimate that on these 90 days, Pediatrics could have filled another 20 beds above capacity. Delaware Medical Center has an additional 20 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:

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 20 beds if Pediatrics rents this extra capacity from Delaware Medical Center.

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 20 beds if Pediatrics rents this extra capacity from Delaware Medical Center. (Round your intermediate calculations to the nearest whole number. 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 A DELAWARE MEDICAL CENTER Computation of Change in Earnings From Rental of Additional Beds For the Year Ended June 30, 20x2 Increase in revenue $ 540,000 Increase in expenses: 180,000 Variable charges by medical center Fixed charges by medical center Salaries 180,000 Total increase in expenses Net change in earnings from rental of additional 20 beds