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Let us suppose that a hospital wants to set their fees for an overnight stay such that the contribution margin on a hospital room will
Let us suppose that a hospital wants to set their fees for an overnight stay such that the contribution margin on a hospital room will be 25%. The cost to the hospital of an overnight stay (staff, physical equipment, and supplies) is $530. What fee should they charge to obtain a contribution margin of 25%? [Hint: if the contribution margin is 25%, then the $530 cost is 75% of Operating Revenue or room fee.]
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