P16-32. Break-Even Analysis in a Not-for- Profit Organization Melford Hospital operates a general hospital but rents space to separately owned entities rendering specialized services such as pediatrics and psychiatry. Melford charges each separate entity for patients' services (meals and laundry) and for administrative services (billings and collections). Space and bed rentals are fixed charges for the year, based on bed capacity rented to each entity. Melford charged the following costs to Pediatrics this year: In addition to these charges from Melford Hospital, Pediatrics incurred the following personnel costs: * These salaries are fixed within the ranges of annual patient-days considered in this problem. During the year, Pediatrics charged each patient $400 per day, had a capacity of 80 beds, and had revenues of $8,000,000 for 365 days. Pediatrics operated at 100% capacity on 90 days during this period. It is estimated that during these 90 days, the demand exceeded 100 beds. Melford will have 20 additional beds available for rent next year. If Pediatrics rents the beds from Melford, the additional rental would proportionately increase Pediatrics' annual fixed charges that are based on bed capacity. Required 1. Calculate the minimum number of patient-days required for Pediatrics to break even next year, if the additional beds are not rented. Patient demand is unknown, but assume that revenue per patient-day. cost per patient-day, cost per bed, and salary rates next year will be consistent with the current year. 2. Assume Pediatrics rents the extra 20-bed capacity from Melford during the busy 90-day period. Determine the net increase or decrease in earnings by preparing a schedule of increases in revenues and costs for next year. Assume that patient demand, revenue per patient-day, cost per patient-day, cost per bed, and salary rates remain the same as the current year