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Ques_5.4 and 5.5 - Break even analysis




Question;Please provide all answers and solutions on;INDIVIDUAL Excel Worksheets.;#1:Question 5.4;General Hospital, a not for profit acute care;facility, has the following cost structure for its inpatient services;Fixed costs $10,000;Variable cost per inpatient day $200;Charge (revenue) per inpatient day $1000;The hospital expects to have a patient load of;$15,000 inpatient days next year;a. Construct;the hospital?s base case projected P&L statement;b. What;is the hospital?s breakeven point?;c. What;volume is required to provide a profit of $1,000,000? A profit of $500,000?;d. Now;assume that 20 percent of the hospital?s inpatient days come from a managed;care plan that wants a 25 percent discount from charges. Should the hospital agree to the discount;proposal?;#2: Question;5.5;You are considering starting a walk-in clinic. Your financial projections for the first year;of operations are as follows;Revenues (10,000 visits) $400,000;Wages and benefits;$220,000;Rent;$5000;Depreciation $30,000;Utilities;$2500;Medical supplies $50,000;Administrative supplies $10,000;Assume that all cost are fixed, except supply costs;which are variable. Furthermore, assume;that the clinic must pay taxes at a 30 percent rate.;a. Construct;the clinic?s projected P&L statement.;b. What;number of visits is required to break even?;c. What;number of visits is required to provide you with an after-tax profit of;$100,000?


Paper#40151 | Written in 18-Jul-2015

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