Children hospital predicts variable costs of 70% of total revenue and

Children Hospital predicts variable costs of 70% of total revenue and fixed costs of $42 million per year for 2011.

a. Compute the break-even point expressed in total revenue.

b.In 2011 Children’s Hospital expects total revenue of $150 million from 200,000 patient days. Compute (a) expected profit for 2011 if costs behave as expected, and (b) total profit if variable costs in 2011 are 10% greater than predicted.

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