St. Mark's Hospital contains 500 beds. The occupancy rate varies between 60% and 90% per month, but the average occupancy rate is generally 80%. In other words, on average, 80% of the hospital's beds are occupied by patients. At this level of occupancy, the hospital's operating costs are $37 per occupied bed per day, assuming a 30-day month. This $37 figure contains both variable and fixed cost elements. This average cost figure drops to $34 when the occupancy rate is 90% (typically during the months of July and August). During June, the hospital's occupancy rate was only 60% and a total of $424,600 in operating costs was incurred during the month. Required: 1-a. Using the high-low method, estimate the variable cost per occupied bed on a daily basis. (Round your answer to 3 decimal places.) Variable cost per bed-day 1-b. Using the high-low method, estimate the total fixed operating costs per month. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Total fixed operating costs Total expected costs per month 2. Assume an occupancy rate of 70% per month. What amount of total operating cost would you expect the hospital to incur? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
St. Mark's Hospital contains 500 beds. The occupancy rate varies between 60% and 90% per month, but the average occupancy rate is generally 80%. In other words, on average, 80% of the hospital's beds are occupied by patients. At this level of occupancy, the hospital's operating costs are $37 per occupied bed per day, assuming a 30-day month. This $37 figure contains both variable and fixed cost elements. This average cost figure drops to $34 when the occupancy rate is 90% (typically during the months of July and August). During June, the hospital's occupancy rate was only 60% and a total of $424,600 in operating costs was incurred during the month. Required: 1-a. Using the high-low method, estimate the variable cost per occupied bed on a daily basis. (Round your answer to 3 decimal places.) Variable cost per bed-day 1-b. Using the high-low method, estimate the total fixed operating costs per month. (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.) Total fixed operating costs Total expected costs per month 2. Assume an occupancy rate of 70% per month. What amount of total operating cost would you expect the hospital to incur? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:St. Mark's Hospital contains 500 beds. The occupancy rate varies between 60% and 90% per month, but the average occupancy rate
is generally 80%. In other words, on average, 80% of the hospital's beds are occupied by patients. At this level of occupancy, the
hospital's operating costs are $37 per occupied bed per day, assuming a 30-day month. This $37 figure contains both variable and
fixed cost elements. This average cost figure drops to $34 when the occupancy rate is 90% (typically during the months of July and
August).
During June, the hospital's occupancy rate was only 60% and a total of $424,600 in operating costs was incurred during the month.
Required:
1-a. Using the high-low method, estimate the variable cost per occupied bed on a daily basis. (Round your answer to 3 decimal
places.)
Variable cost
1-b. Using the high-low method, estimate the total fixed operating costs per month. (Do not round intermediate calculations. Round
your answer to the nearest whole dollar amount.)
Total fixed operating costs
per bed-day
Total expected costs
per month
2. Assume an occupancy rate of 70% per month. What amount of total operating cost would you expect the hospital to incur? (Do not
round intermediate calculations. Round your answer to the nearest whole dollar amount.)
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