Hi,

I am wondering if you may be able to help me with the following question:

Suppose you just found out that the $3,215 monthly malpractice insurance charge is based on an accounting allocation scheme that divides the hospital?s total annual malpractice insurance costs by the total annual number of inpatient days and outpatient visits to obtain a per episode charge. Then, the per episode value is multiplied by each department's projected number of patient days or outpatient visits to obtain each department's malpractice cost allocation. Does this allocation scheme bias your breakeven analysis? (No calculations are necessary.)

Number of visits 0 Net revenue $0 Salaries and wages Physicians fees Malpractice insurance Travel and education General insurance Subscriptions Electricity Water Equipment rental Building lease Other operating expenses Total operating expenses $0 0 0 0 0 0 0 0 0 0 0 $0 Net profit (loss) $0 Gross margin (%) #DIV/0