1. What is the strategic role of CVP analysis for Melford hospital?
2. Determine the minimum number of patient days required for pediatrics to breakeven for the year ending June 30,19X3, if the additional 20 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 will remain the same as for the year ended June 30, 19X2.
3. Assume that patient demand, revenue, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending June 30, remain the same as for the year ended June 30, 19X2. Prepare a schedule of increase in revenue and increase in costs for the year ending June 30, 19X3, in order to determine the net increase or decrease in earnings from the additional 20 beds if pediatrics rents this extra capacity from Melford.
The solution looks at cost volume profit problems.