**1. ****General Hospital a not-for-profit acute care facility, has the following cost structure for its inpatient services.**

Fixed costs |
$10,000,000 |

Variable cost per inpatient day |
$ 200 |

Charge (revenue)per inpatient day |
$ 1,000 |

**The hospital expects to have a patient load of 15,000 inpatient days next year.**

**a. ****Construct the hospitals base case projected P&L statement.**

**b. ****What is the hospitals breakeven point**

**c. ****What volume is required to provide a profit of $1,000,000? A profit of $500,000?**

**d. ****Assume 20% of the hospitals inpatient days come from a managed care plan that wants a 25% discount from charges. Should the hospital agree to the discount proposal?**

**2. ****You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows:**

Revenues (10,000) visits |
$400,000 |

Wages and benefits |
$220,000 |

Rent |
$ 5,000 |

Depreciation |
$ 30,000 |

Utilities |
$ 2,500 |

Medical supplies |
$ 50,000 |

Administrative supplies |
$ 10,000 |

**Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 30% rate.**

**a. ****Construct the clinics projected P&L statement.**

**b. ****What number of visits is required to breakeven?**

**c. ****What number of visits is required to provide you with an after tax profit of $100,000?**