Case $7-53($Algo$)$ Break$-$Even Analysis; Hospital CVP Relationships $($LO $7-1,7-4)$

Delaware Medical Center operates a general hosplal. The medical center also rents space and beds to separately owned entities rendering specialized services, such as Pediatrics and Psychiatric Care. Delaware charges each separate entity for common services, such as patients' meals and laundry, and for administrative services, such as billings and collections. Space and bed rentals are fixed charges for the year, based on bed capacity rented to each entity. Delaware Medical Center charged the following costs to Pediatrics for the year ended June $30,20\backslash$times $1$:

$\backslash$table$[[$Costs$,\backslash$table$[[$Patient Days$],[($variable$)]],\backslash$table$[[$Bed Capacity$],[($fixed$)]]],[$Dietary$,\backslash$table$[[$$$960,000$

Delaware Medical Center has the following minimum departmental personnel requirements, based on total annual patient days:

$\backslash$table$[[$Annual Patient Days,Aides,Nurses,$\backslash$table$[[$Supervising$],[$Nurses$]]],[$Up to $22,000,20,10,4],[22,001$ to $26,000,25,14,5],[26,001$ to $29,200,31,16,5]]$

Pediatrics always employs only the minimum number of required personnel. Salaries of supervising nurses, nurses, and aides are therefore fixed within ranges of annual patient days.

Pediatrics operated at $100$ percent capacity on $90$ days during the year ended June $30,201.$ Administrators estimate that on these $90$ days, Pediatrics could have filled another $20$ beds above capacity. Delaware Medical Center has an additional $20$ beds available for rent for the year ending June $30,20$x$2.$ Such additional rental would increase Pediatrics' fixed charges based on bed capacity. $($In the following requirements, ignore income taxes.$)$

Required:

Calculate the minimum number of patient days required for Pediatrics to break even for the year ending June $30,202,$ if the additional $20$ beds are not rented. Patient demand is unknown, but assume that revenue per patient day, cost per patient day, cost per bed, and salary rates will remain the same as for the year ended June $30,20$x$1.$

Assume that patient demand, revenue per patient day, cost per patient day, cost per bed, and salary rates for the year ending June $30,202,$ remain the same as for the year ended June $30,201.$ Prepare a schedule of Pediatrics' increase in revenue and increase in costs for the year ending June $30,20\backslash$times $2.$ Determine the net increase or decrease in Pediatrics' earnings from the additional $20$ beds if Pediatrics rents this extra capacity from Delaware Medical Center.