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St. Martin Hospital Break Even Point

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St. Martin Hospital has overall variable cost of 20% of total revenue and fixed costs of $40 million per year.

1. Computer the break even point expressed in total revenue.

2. A patient-day is often used to measure the volume of a hospital. Suppose there are to be 40,000 patient-days next year. Compute the average daily revenue per patient-day necessary to break even.

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Solution Summary

This concise solution provides formula and calculations for break-even point in revenue and average daily revenue.

Solution Preview

1. Breakeven point in total revenue = Fixed cost/contribution margin ...

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