Shady Rest Nursing Home has 100 private pay residents. The administrator is concerned about balancing the ratio its private pay to non-private pay patients. Non-private pay sources reimburse an average of $100 per day whereas private pay residents pay average 100 percent of full daily charges. The administrator estimates that variable cost per resident per day is $25 for supplies, food, and contracted services and annual fixed costs are $4,562,500.What is the daily contribution margin of each non-private pay resident?If 25 percent of the residents are non-private pay, what will shady Rest charge the private pay patients in order to break even?What if non-private pay payors cover 50 percent of the residents?

The total cost of production of a good comprises of the total fixed cost of production and the total…

Answered: Shady Rest Nursing Home has 1

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

Related questions

Question

100%

Shady Rest Nursing Home has 100 private pay residents. The administrator is concerned about balancing the ratio its private pay to non-private pay patients. Non-private pay sources reimburse an average of $100 per day whereas private pay residents pay average 100 percent of full daily charges. The administrator estimates that variable cost per resident per day is $25 for supplies, food, and contracted services and annual fixed costs are $4,562,500.

What is the daily contribution margin of each non-private pay resident?
If 25 percent of the residents are non-private pay, what will shady Rest charge the private pay patients in order to break even?
What if non-private pay payors cover 50 percent of the residents?

Expert Solution