Question 2

a.

An OPD facility on an average charge $ 200 per patient visit for treating common ailments. The pure variable costs per visit in terms of medical supplies used amount to $ 30 per patient visit. The pure Fixed Costs to run the OPD amount to $ 600,000. Additionally, the OPD provided us with the following data for doctor charges:

Patient Visit	Total Charge
2000	240,000
2500	290,000
3000	320,000
3500	340,000
4000	370,000
4500	400,000
5000	420,000

Calculate the BEP for the hospital.

b.

A hospital is currently using an old X-Ray machine and there is a proposal to switch to a newer model. The variable cost per unit and total fixed cost associated with the current X-ray machine are $ 100 p.u. and $ 300,000 respectively. The variable cost per unit and total fixed cost associated with the new X-ray machine are $ 80 p.u. and $ 400,000 respectively. The revenue generated per patient visit is $ 150. At what utilization level should the company shift from the old machine to the new machine?