ACC 206 Week 3 Chapter 5 Exercise 3 Break-even and other CVP relationships

Chapter 5 Exercise 3: Break-even and other CVP relationships 

Cedars Hospital has average revenue of $180 per patient day. Variable costs are $45 per patient day; fixed costs total $4,320,000 per year.

1. a.       How many patient days does the hospital need to break even?
2. b.      What level of revenue is needed to earn a target income of $540,000?
3. c.       If variable costs drop to $36 per patient day, what increase in fixed costs can be tolerated without changing the break-even point as determined in part (a)?