Babbling Brook Hospital Has Overall Variable Costs of 75% of Total

question 89

Multiple Choice

Babbling Brook Hospital has overall variable costs of 75% of total revenues and fixed costs of $40 million per year. There are 40,000 patient- days estimated for next year. The break- even point expressed in total revenue is:

• A) $160 million
• B) $10 million
• C) $40 million
• D) None of these answers is correct.

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Definitions:

Market Rate

The interest rate available to most borrowers in the financial market, applied to loans or savings products.

Expected Profit

The forecasted or anticipated earnings from an investment or business activity, considering potential risks and returns.

Current Cost

The price that would be paid for goods or services if purchased in the current market, as opposed to historical cost.

User Cost

The cost of using a durable good or asset, which includes depreciation, interest lost on funds used to buy the asset, and maintenance costs.