St. Mark\'s Hospital contains 450 beds. The average occupancy rate is 80% a mont

Question

St. Mark's Hospital contains 450 beds. The average occupancy rate is 80% a month. In other words on average, 80% of the hospital's beds are occupied by patients. At this level of occupany, the hospitals operating costs are $32 per occupied bed per day, assuming a 30-day month. This $32 figure contains both variable and fixed cost
elements.
During June, the hospital's occupancy rate was only 60%. A total of $326,700 in operating cost was incurred during the month.
1. Using the hi-lo method, estimate :

a. the variable cost per occupied bed on a daily basis.

b. the total fixed operating costs per month.

Explanation / Answer

Please Rate

High Activity 360 345600 Low Activity 270 326700 90 18900 Variable Cost Change in cost / Change in Activity 18900 /90 210

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