Days of Our Lives Hospital Has Total Variable Costs of 90

question 192

Multiple Choice

Days of Our Lives Hospital has total variable costs of 90% of total revenues and fixed costs of $50 million per year. There are 50,000 patient- days estimated for next year. What is the break- even point expressed in total revenue?

• A) $500 million is the break- even point.
• B) $12.5 million is the break- even point.
• C) $50 million is the break- even point.
• D) None of these answers is correct.

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Definitions:

Interest Rate

The proportion, in percentage, charged by a lender to a borrower for the use of assets, usually expressed on an annual basis.

Annual Interest

The amount of interest paid or earned over a one-year period, typically expressed as a percentage of the principal.

Graduate

The act of completing a course of study at a college or university, culminating in the receipt of a degree.

Discount Rate

This is the interest rate utilized in discounted cash flow analysis to assess the current value of future anticipated cash flows.