Question: Metropolitan Healthcare Center (MHC) provides inpatient critical care and has a partnership with an insurance company covering 20,000 members. The insurance company reimburses MHC on a fee-for-service basis, with an average reimbursement rate of $12,000 per admission. The financial data for MHC is as follows: Average revenue per admission $12,000 Average variable cost per admission $5,000 Direct fixed cost or overhead $10,500,000 1. What is the break-even volume of MHC? 2. Last year, MHC provided services to 2,100 patients under this insurance company. At this service volume, what is the degree of operating leverage?

Question: Metropolitan Healthcare Center (MHC) provides inpatient critical care and has a partnership with an insurance company covering 20,000 members. The insurance company reimburses MHC on a fee-for-service basis, with an average reimbursement rate of $12,000 per admission. The financial data for MHC is as follows: Average revenue per admission $12,000 Average variable cost per admission $5,000 Direct fixed cost or overhead $10,500,000 1. What is the break-even volume of MHC? 2. Last year, MHC provided services to 2,100 patients under this insurance company. At this service volume, what is the degree of operating leverage?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter1: Introduction To Managerial Accounting

Section: Chapter Questions

Problem 4MAD

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What is the degree of operating leverage?
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What is the degree of operating leverage ?
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