General Hospital, a not-for-profit acute care facility, has the following cost structure for its inpatient services:

Fixed costs$10,000,000

Variable cost per inpatient day$200

Charge (revenue) per inpatient day$1,000

The Hospital expects to have a patient load of 15, 000 inpatient days next year.

a.Construct the hospital's base case projected P & L statement.

b.What is the hospital's breakeven point?

c.What volume is required to provide a profit of $1,000,000? A profit of $500,000?

d.Now assume that 20 percent of the hospital's inpatient days come from a managed care plan that wants a 25 percent discount from charges.Should the hospital agree to the discount proposal?