Question
St. Marks Hospital contains 460 beds. The occupancy rate varies between 60% and 90% per month, but the average occupancy rate is generally 80%. In
St. Marks Hospital contains 460 beds. The occupancy rate varies between 60% and 90% per month, but the average occupancy rate is generally 80%. In other words, on average, 80% of the hospitals beds are occupied by patients. At this level of occupancy, the hospitals operating costs are $33 per occupied bed per day, assuming a 30-day month. This $33 figure contains both variable and fixed cost elements. This average cost figure drops to $30 when the occupancy rate is 90% (typically during the months of July and August).
During June, the hospitals occupancy rate was only 60% and a total of $345,320 in operating costs was incurred during the month.
Required:
1-a. Using the high-low method, estimate the variable cost per occupied bed on a daily basis. (Round your answer to 3 decimal places.)
1-b. Using the high-low method, estimate the total fixed operating costs per month. (Do not round intermediate calculations.)
2. Assume an occupancy rate of 70% per month. What amount of total operating cost would you expect the hospital to incur? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
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