Shady Rest Nursing Home has 100 private pay residents. The administrator is concerned about balancing the ratio of its private pay to non-private pay patients. Non-private pay sources reimburse an average of $100 per day whereas private pay residents pay an average of 100 percent of full daily charges. The administrator estimates that the variable costs per resident per day is $25 for supplies, food, and contracted services and annual fixed costs are $4,562,500.

• What is the daily contribution margin of each non-private pay resident?
• If 25 percent of the residents have non-private pay, what will Shady Rest charge the private pay patients in order to break even?
• What if non-private payor covers 50 percent of the residents?