Family Hospital predicts variable costs of 60% of total revenue and fixed costs of $38 million per year for the coming year. Requirements

1.	Compute the break-even point expressed in total revenue.
2.	Family Hospital expects total revenue of $140 million from 250,000 patient-days. Compute expected profit (a) if costs behave as expected, and (b) if variable costs are 25% greater than predicted

Requirement 1. Compute the break-even point expressed in total revenue.Determine the formula and then enter the amounts to calculate the break-even point in total revenue. (Enter dollar amounts in millions and any percentages or ratios in decimal form to two decimal places, .XX.)

Total fixed costs

/

Contribution margin ratio

=

Break-even in total revenue

Part 2

$38

/

0.4

=

$95

million

Part 3 Requirement 2.

Family Hospital expects total revenue of $140 million from 250,000 patient-days. Compute expected profit (a) if costs behave as expected, and (b) if variable costs are 25% greater than predicted. Begin by determining the formula to calculate net profit (loss), then calculate how much net profit will be generated (a) if costs behave as expected, and

	(a)
Total revenue	$140
Variable costs	?
Contribution margin	?
Fixed costs	38
Net profit (loss)	?

(b) if variable costs are 25% greater than predicted. (Enter dollar amounts to the nearest tenth of a million. Use parentheses or a minus sign for net losses.) ?