Case 1

Dubai Medical Centre

Dubai Medical Centre - Cost To Pediatric Year Ended 30, 20x1
Patient Days Bed Capacity
(Variable)
(Fixed)
Dietary
$
600,000 $
Janitorial
$
$
70,000
Laundry
$
300,000 $
Laboratory
$
450,000 $
Pharmacy
$
350,000 $
Repairs And Maintenance
$
$
30,000
General And Administrative
$
$ 1,300,000
Rent
$
$ 1,500,000
Billings and Collections
$
300,000 $
Total
$ 2,000,000 $ 2,900,000

ADDITIONAL INFO
Capacity
Each patient charge (Revenue per patient)
Revenue

$
$

Annual Salary Cost - Fix Cost / Year

Supervising Nurses
Nurses
Aides
Total Fix Cost / Year

$
$
$
$

60 Beds
300 Per Day
6,000,000 Per 365 Days

25,000
20,000
9,000
54,000

Dubai Medical Center - Minimum Departemental Personnel

Annual Patient Days
Aides
Nurses
Up to 22000
22001 to 26000
26001 to 29200

20
25
31

10
14
16

Dubai Medical Center

Break-Even Point in Patient Days: Pediatrics
For the Year Ended June 30, 20x2
Fixed costs:
Fixed cost (bed capacity)
Supervising nurses ($ 25,000 x 4)
Nurses ($ 20,000 x 10)
Aids ($ 9,000 x 20)
Total fixed costs

$
$
$
$
$

2,900,000
100,000
200,000
180,000
3,380,000

Contribution margin per patient-day:

Revenue per patient-day

300

Variable cost per patient-day

($6,000,000 / $300 ) = patient days
($2,000,000 /20,000 ) = patient days

20,000
100

100

Contribution margin per patient-day

200

Break-even point in patient days:

Total fixed costs
Contribution margin per patient-day
Break-even point in patient days

$
$

3,380,000
200
16,900

Dubai Medical Center

Loss from Rental of Additional 20 Beds: Pediatrics
For the Year Ended June 30, 20x2
Increase in revenue:
Additional beds
Days
Charge per day ($)
Increase in revenue ($)
Increase in expenses:
Variable cost
Additional beds
Days
Charge per day ($)
Variable cost
Fixed cost
Fixed cost (from bed capacity)
Bed capacity
Fixed cost per bed ($ 2,900,000 / 60)
Additional beds
Fixed cost for 20 Additional bed

$
$

$
$

$
$
$

20
90
300
540,000

20
90
100
180,000

2,900,000
60
48,333.33
20
966,667

Total Increase in Expenses

Less Earning by rental additional 20 beds
conclusion : increase in expenses higher than increase in revenue

Question :
1. Minimum number of patient days required for
Pediatric for year ending June 30, 20x2, if
additional 20 beds are not rented?
Condition :
- Patient demand is unknown
- Assume this condition remain the same with year ended June 30, 20x1:
* Revenue per patient day
* Cost per patient day
* Cost per bed
* Salary rates
Answer:

$ 1,146,667
$
606,667

Minimum number of patient days required ~ Break Even Point In Patient Days
= 16,900

2. Net increase or decrease in Pediatrics by rent additional 20 bed from Dubai Medical Centre?
- Assume this condition remain the same with year ended June 30, 20x1:
* Patient demand
* Revenue per patient day
* Cost per patient day
* Cost per bed
* Salary rates
Answer:
- Less earning by rental additional 20 beds
Compare between revenue and expenses:
Increase revenue
$
540,000
Increase expenses
a. Variable cost
$
180,000
b. Fixed cost
$
966,667
$ 1,146,667
Discrepancy is as less earning by rent additiona 20 bed
$
606,667

onnel
Supervising
Nurses
4
5
5

employed minimum number of required personne;

employed minimum number of required personne;
employed minimum number of required personne;

Dubai Medical Centre?