Your nursing home defines output as a patient day. Its present volume is 26,000 patient days. The average cost per day is $90.00. Present revenues and costs are presented below:
Charge Patients (6,000 Patient Days) $750,000
Fixed-Price Patients (20,000 Patient Days) $1,800,000
Total Net Revenues $2,550,000
Fixed Costs $1,170,000
Variable Costs ($45/PD) $1,170,000
Total ($90/PD) $2,340,000
Net Income $210,000
Using this information, answer the following two questions:
a. What is the break-even in patient days for this nursing home, assuming no profit is required?
b. If volume goes up 10% to 28,600 patient days and payer mix is unchanged, what will net income be?