Millbridge Memorial Hospital provides comprehensive physical exams.

On pages 153-154 in your course textbook, please complete the following
problems: 4-31 through 4-35. Answer the problems using the information provided
from Chapters 1-4 in the course textbook. Compile your answers in a Word
document, and upload it in Blackboard.

4-31. Millbridge Memorial Hospital provides comprehensive physical exams.
The charge per exam is $100, while the variable cost per exam is $65. Thirty
percent of the patients who come in for an exam are private pay. They must pay
the full charge. Seventy percent of the patients are covered by an insurance
company that has an agreement with the hospital that reduces the charge by 20%.
The hospital has $210,000 in fixed costs per year. How many exams must the
hospital provide in order to break even?

4-32. The fixed costs of running a fund-raising dinner for Meals for the
Homeless are $10,000 and the variable costs are $75 per attendee. The facility
where the event is being held can accommodate 500 people. Answer the following
questions about the event:

1. If Meals charged $275 per ticket, how many people would have to
attend the gala for the organization to break even on the event?

2. If Meals charged $300 per ticket, the contribution margin from each
ticket sold would be: __________.

3. If 500 people attend the event, how much does the organization have
to charge each attendee to earn a profit of $100,000? (Assume costs from
original problem are still in effect.)

4-33. A Greener World expects to have $15,000 in fixed costs. If its
fixed costs do not change but the amount each marcher raises through pledges
declines from $55 to $50 and its variable cost/unit increases from $25 to $30,
how much will its break even quantity increase?

4-34. The Helensville Symphony incurs $3,000,000 of fixed costs each
year. The variable cost for each person attending one of the orchestra’s
performances is $24. If the average charge for a ticket to attend a performance
of the Helensville Symphony is $100, how many tickets must it sell each year to
break even?

4-35. Millbridge Family Services (MFS) currently operates a foster care
program that is fully funded by the state. Changing government priorities are
expected to result in a 20% reduction in its state foster care funding for the
upcoming fiscal year. MFS’s management is considering eliminating the foster
care program in the next fiscal year in light of these anticipated funding
cuts. The total foster care program expenses for the upcoming fiscal year is
$120,000. The foster care program’s budgeted expenses include $25,000 of
salaries and occupancy costs that are allocated to its program budget from MFS
central administration. These allocated expenses of $25,000 are unavoidable
even if the foster care program is eliminated. What is the total relevant cost
that should be considered in making this decision?

Explanation & Answer

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