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Ques_5.4 and 5.5 - Break even analysis




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#77412 | Written in 18-Jul-2015

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