In Option one, the payroll for nurses is a step-function cost

In Option two, the payroll for nurses is a variable cost

BE for Option One

200x = (9000 + 5500) + 30x

200x = 14500 + 30x

170x = 14500

BE point = 86 visits

We don't have to continue calculating because 83 visits equates to 14 days - You get that by calculating: = 83 visits / 6 visits per day. The relevant range for this one is 0 - 20 days because that is what one nurse can handle.

BE for Option Two

200x = 9000 + 100x

100x = 9000

BE point = 90 visits

1. Calculate the Breakeven point for each option. Specifically discuss why these breakeven volumes differ. a

2. Which option is preferable? Why?

3. Assuming the quarterly data represent the pattern for the upcoming year, how should Mr. Hoover staff the division so as to maximize the VNA's surplus? Consider the seasonal volume discussed in the case.

4. What other factors or options should Mr. Hoover consider? Think outside of the box.

\fSpringfield Visiting Nursing Association BreakEven Analysis Examples Option 1, Full Time Nurses Option 2, Contract Projected Results, 10 days Projected Results, 20 days Nurses Opt 1 Opt 2 Opt 1 Revenue per visit Variable Cost per visit: Supplies Nurse Staffing Fee per visit ($350/5) Contribution Margin per visit Number of days Number of visits per Nursing Day 10 10 20 5 5 5 50 50 100 - - - 5,500 - 11,000 9,000 (14,500) 9,000 (9,000) 9,000 (20,000) Number of visits (Number of days x 5 visits per day) Total Contribution to division (CM per visit x number of visits) Step Function Costs: Nurse salaries (one nurse per 20 days @ $5,500 per nurse) Fixed Costs: Rent and other Contribution to VNA for month Student's Name: Date: es number of days according to the problem ojected Results, 20 days Projected Results, 30 days Projected Results, 45 days Projected Results, 55 days Opt 2 Opt 1 20 5 100 - 9,000 (9,000) Opt 2 Opt 1 Opt 2 Opt 1 Opt 2 em Examples Projected Results, 61 days Opt 1 Opt 2 Projected Results, 101 days Opt 1 Opt 2 101 101 5 5 505 505 - - 36,000 - 9,000 (45,000) 9,000 (9,000)