Determining charges for private pay residents. Shady Grove Nursing Home has 220

Question

Determining charges for private pay residents. Shady Grove Nursing Home has 220 private pay residents. The administrator is concerned about balancing the ratio of its private pay to non-private pay patients. Non-private pay sources reimburse an average of $125 per day whereas private pay residents pay on average 90 percent of full daily charges. The administrator estimates that variable cost per resident per day is $45 for supplies, food, and contracted services, and annual fixed costs are $6,000,000.

Explanation / Answer

a)daily contribution margin of each non-private pay resident = (125-45)/125 =64.00% b)no of total patients = x 75%*x = 220 x= 293.33 non private patients = 25%*293.33 =73.3325 73.3325*(125-45)*365 + 220*(P-45)*365 =6,000,000 P = $93 Shady Rest charge the private pay patients to break even =$93 c) no of total patients = x 50%*x = 220 x= 440 non private patients = 50%*440 = 220 220*(125-45)*365 + 220*(P-45)*365 =6,000,000 P = $39.72 Shady Rest charge the private pay patients to break even =$39.72 d) 73.3325*(125-45)*365 + 220*(P-45)*365 =6,000,000 +80,000 P=$94. administrator must raise the per day charge for the private insured residents = $1

Related Questions

Navigate

• Browse (All)
• Browse D
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.