Question

1. Hettinger Hospital bases its budgets on patient-visits. The hospital's static budget for March appears below:
   

Budgeted number of patient-visits		6,800
Budgeted variable costs:
Supplies (@$4.80 per patient-visit)	$	32,640
Laundry (@$6.70 per patient-visit)		45,560
Total variable cost		78,200
Budgeted fixed costs:
Wages and salaries		42,160
Occupancy costs		67,320
Total fixed cost		109,480
Total cost	$	187,680

The total fixed cost at the activity level of 7,700 patient-visits per month should be:

• $123,970
• $187,680
• $109,480
• $212,520

Answer 1

Total fixed cost will be same at any point of activity level, (unless patient visits are within occupancy capacity). Assumed patient visits are within occupancy capacity.

Total fixed cost per month at the activity level of 7,700 patient-visits should be $109,480

Let us say occupant capacity is 6,800

Then, we need to calculate fixed cost at predetermined rate for activity level of 7,700

i.e., Predetermined rate = Total fixed cost / 6,800

= 109480 / 6800

= 16.1

Therefore total fixed cost should be 7700*16.1 = $123,970