Problem 8 (Break-Even Analysis with Step Fixed Costs) The Pediatric Ward at St. Theresa's Hospital has a capacity of 70 beds and operates 24 hours a day year-around. The measure of activity in the department is patient-days, where one patient-day represents one patient occupying a bed for one day. The average revenue per patient-day is P4,800 and the average variable cost per patient-day is P1,800. The fixed cost of the department (not including personnel costs) is P27,400,000. The only personnel directly employed by the Pediatric Ward are aides, nurses and supervising nurses. The hospital has minimum staffing requirements for the department based on total annual patient-days in Pediatrics. Hospital requirements, beginning at the minimum expected level of activity, follow: Supervising Annual Patient-Days Aides Nurses Nurses 10,000 - 12,000. 7 15 3 12,001 - 13,750. 8 15 3 13,751 - 16,500.. 16 16,501 - 18,250. 10 16 18,251 - 20,750. 10 17 5 20,751 - 23,000. 11 18 9 4 4 5 These staffing levels represent full-time equivalents, and it should be assumed that the Pediatric Ward always employs only the minimum number of required full-time equivalent personnel. Average annual salaries for each class of employee are: aides, P360,000; nurses, P580,000; and supervising nurses, P760,000. Required: 1. Compute the total fixed costs (including the salaries of aides, nurses, and supervising nurses) in the Pediatric Ward for each level of activity shown above (i.e., total fixed costs at the 10,000-12,000 patient-day level of activity, total fixed costs at the 12,001-13,750 patient-day level of activity, etc.) 2. Compute the minimum number of patient-days required for the Pediatric Ward to break even. 3. Determine the minimum number of patient-days required for the Pediatric Ward to earn an annual profit of P7,200,000