Question
St James Hospital contains 550 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital's beds are
St James Hospital contains 550 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital's beds are occupied by patients. At this level of occupancy, the hospital's operating costs are 32 per occupied bed per day, assuming a 30-day month. T
his 32 figure contains both variable and fixed cost elements. During June, the hospital's occupancy rate was only 60%. A total of 399,300 in operating cost was incurred during the month.
Required:
1) Using the high-low method, estimate:
(a) The variable cost cost per occupied bed on a daily basis
(b) The total fixed operating cost per month
2) Assume an occupancy rate of 70% per month. What amount of total operating cost would you expect the hospital to incur
3) At an activity level of 6,800 units, Pen Corporation's total variable cost is 125,188 and its total fixed cost is 164,152. Required for the activity level of 7,100 units, compute:
a) The total variable cost,
b) The total fixed cost,
c) The total cost,
d) The average variable cost per unit,
e) The average fixed cost per unit, and
f)The average total cost per unit. Assume that this activity level is within the relevant range.
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