Instructor and Currently working at university of Medical Sciences and Technology as Administrative Assistant.
Hospital costs
Gotham city hospital unionized. In 2006 received an average annual Salary of $45,000. The hospital administrator is considering change in the contract with nurses for 2007. In turn, the hospital may also change the way it charges nursing costs to each department.
The hospital each department accountable for its financial performance and it allocates revenues and expenses to departments. Consider the expenses of the obstetrics department in 2006.
Variable expenses (based on 2006 patientdays) are:
Meals 
$610.000 
Laundry 
260.000 
Laboratory 
900.000 
Pharmacy 
850.000 
Maintenance 
150.000 
Other 
530.000 
Total 
$ 3.300.000 
Fixed expenses (based on number of beds) are:
Rent 
$ 3.300.000 
General administrative services 
2.200.000 
Janitorial 
200.000 
Maintenance 
150.000 
Other 
350.000 
Total 
$ 5.900.000 
Management assigns nurses to departments on the basis of annual patientdays as follows:
Volume Level in Patientdays 
Number of Nurses 
10.00012.000 
30 
12.00116.000 
35 
Total patientdays are the number of patient multiplied by the number of days they are hospitalized. The hospital charges each department for the salaries of the nurses assigned to it.
During 2006, the obstetrics department had a capacity of 60 beds, billed each patient an average of $810 per day, and had revenues of $12, 15 million.
Questions
$11. Compute the 2006 volume of activity in patientdays.
$12. Compute the 2006 patientdays that would have been necessary for the obstetrics department to recoup all fixed expenses except nursing expenses.
$13. Compute the 2006 patientdays that would have been necessary for the obstetrics department to breakeven including nurses salaries as fixed cost.
$14. Suppose obstetrics must pay $200 per patientday for nursing services. This plan would replace the twolevel, fixed –cost system employed in 2006.compute what the breakeven point in patientdays would have been in 2006 under this plan.
Answer
$11. $12,150,000= 15,000 patientdays
$810
$12. Variable costs = $3,300,000 = $220 per patientday
15,000
Contribution margin = $810  $220 = $590 per patientday
To recoup the fixed expenses:
$5,900,000 ÷ $590 = 10,000 patientdays
$13. The fixed cost levels differ as the relevant range changes:
PatientDays 
NonNursing 
Nursing 
Total 
Fixed Expenses 
Fixed Expenses 
Fixed Expenses 

10,00012,000 
$5,900,000 
$1,350,000(1) 
$7,250,000 
12,00116,000 
5,900,000 
1,575,000(2) 
7,475,000 
(1) $45,000 x 30 = $1,350,000
(2) $45,000 x 35 = $1,575,000
To break even on higher level of fixed costs:
$7,250,000 ÷ $590 = 12,288 patientdays
This answer exceeds the higherlevel maximum; therefore, this answer is infeasible.
The department must operate at a $7,475,000 level of fixed costs to break even:
$7,475,000 ÷ $590 = 12,669 patientdays.
$14. The nursing costs would have been variable instead of fixed. The contribution margin per patientday would have been $810  $220  $200 = $390. The breakeven point would be higher: $5,900,000 ÷ 390 = 15,128 patientdays.
Chapter (1): 2A1 and 2A2 Chapter (3): 350 and 353 Chapter (4): 4A1 and 4A2 Chapter (5): 5A1 and 5A2 Chapter (6): 6A1
Tutorial (4)
No. of unite (X) 
TR x 
TR y 
6 
100 
120 
7 
110 
132 
8 
125 
150 
9 
133 
175 
10 
149 
205 
11 
157 
225 
Where:
PX= 3, PY= 5, E= 69
Determine optimal combination?
X and Y
Tutorial (4)
No. of unite (X) 
TR x 
TR y 
6 
100 
120 
7 
110 
132 
8 
125 
150 
9 
133 
175 
10 
149 
205 
11 
157 
225 
Where:
PX= 3, PY= 5, E= 69
Determine optimal combination?
X and Y
Tutorial one (23.6.2013)
Suppose where the following profit function for a certain firm. Find the level of output (Q) which maximizes the profit of the firm:
П= 3.000  2.400Q + 350 Q^{2 } 8⅓Q^{3}
Tutorial two (30.6.2013)
Given the following profit function
П= 10.000 + 400Q = 2Q^{2}
Where:
П = is total profit, Q = is the level of output.
Find the:
$1(i) Determine the output level which maximizes profit.
$1(ii) Consider the situation requires 40 hours of skilled labor and total of 300 hours of skilled labor is variables determine the output level which maximizes the profit.
$1(iii) Find determine 100 hours of skilled labor or total of 400 hours are available what sort of comment in such a case .. how this will effect your solution.
Tutorial three (7.7.2013)
Given the following information about the quantity demanded about the quantity demented of accretion product (x) and its price (P_{X}) Exit lte the demand function:
Q dx 
Px 
2 
7 
3 
6 
4 
5 
7 
2 
Q ^{^ }= Q_{1}+b^{^}p_{x}
b^{^}<^{}0 product ,Q dx = when P_{X }= 3