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

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Chapter 5 Exercise 3Break-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)? 

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