Please help asked question before please can anyone help me with accurate info.

Question

Please help asked question before please can anyone help me with accurate info.

Shady Rest Nursing Home has 100 private pay residents. The administrator is concerned about balancing the ratio its private pay to non-private pay patients. Non-private pay sources reimburse an average of $100 per day whereas private pay residents pay average 100 percent of full daily charges. The administrator estimates that variable cost per resident per day is $25 for supplies, food, and contracted services and annual fixed costs are $4,562,500.

What is the daily contribution margin of each non-private pay resident

Explanation / Answer

Annual Fixed cost = 4562,500 Per day fixed cost = 4562,500/365 = $12,500 As there are 100 Pvt Pay residents, per Pvt Pay resident Fixed cost = 12500/100 = $125 Var cost per resident is $25. So Hospital is recvering $125+$25 = $150 per day from pvt pay residents as Full Daily charge Also Hospital is recovering $100 per day from Non-Pvt pay source. As Var cost per resident pr day is $25. Contribution margin for each Non-pay resident = Amt charged - Var cost = 100-25 = 75 So Daily COnt margin for non-pvt pay resident is $75

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