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Your nursing home defines output as a patient day. Its present

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Your nursing home defines output as a patient day. Its present volume is 26,000 patient days. The average cost per day is $90.00.

Revenues:
 
Charge Patients (6,000 Patient Days)  $750,000
 
  Fixed-­‐Price  Patients  (20,000 Patient Days) 1,800,000  
 
  Total Net  Revenues  $2,550,000
 
Costs:
 
  Fixed  Costs   $1,170,000
 
  Variable Costs ($45/PD) 1,170,000  
 
  Total ($90/PD) $2,340,000  

  Net Income  $210,000
 



1. What is the breakeven in patient days for this nursing home, assuming no profit is required?

2. If volume goes up 10 percent to 28,600 patient days and payer mix is unchanged, what will net income be?
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