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 18%. The cost to the hospital of an overnight stay (staff, physical equipment, and supplies) is $620. What fee should they charge to obtain a contribution margin of 18%? [Hint: if the contribution margin is 18%, then the $620 cost is 82% of Operating Revenue or room fee.]

What is the target fee for an overnight stay? In other words, what must the Operating Revenues from that one room be?