Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Using the data below, answer the specific profitability related questions. General Hospital has a maximum capacity of 14,000 IP visits per year. Fiscal Year 2015

image text in transcribed

Using the data below, answer the specific profitability related questions. General Hospital has a maximum capacity of 14,000 IP visits per year. Fiscal Year 2015 Data: Total IP Visits 11,000 Reimbursement per discharge $ 1,300 Variable Direct costs per discharge $ 820 Variable Administrative costs per discharge $ 12 Fixed OH per year $ 3,300,000 Questions: 1. What is General Hospital's projected Contribution Margin per discharge? Answer 2. What is the number of discharges required for General Hospital to break even? Answer 3. For FY2015, what was the total profit for the year? Answer 4. For Fiscal Year 2016 planning, General Hospital has become aware that a number of high profile physicians are going to move from practicing at General Hospital, to a competitor across town. Please complete updated projections using the assumptions below. General Hospital expects that this loss of cases will result in a decrease of 1,000 discharges in FY16 (vs FY15) General Hospital plans to cut fixed costs by $200,000 (from FY15 levels) Average reimbursement per discharge is not expected to change, except for payor contracted rates (which are scheduled to increase by 2% for FY16). General Hospital's Profit Goal is to match the total profit realized in fiscal year 2015 (i.e. calculated in 3 above). a. What is the variable cost per visit required under this scenario (to meet the profit goal)? Answer b. What contribution margin must be generated per discharge to meet this goal

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting

Authors: Robert Libby, Patricia Libby, Frank Hodge

11th Edition

1264229739, 9781264229734

More Books

Students also viewed these Accounting questions