Babbling Brook Hospital has overall variable costs of 75% of total revenues and fixed costs of $40 million per year. There are 40,000 patient- days estimated for next year. The break- even point expressed in total revenue is:
A) $160 million
B) $10 million
C) $40 million
D) None of these answers is correct.

Question

Quizplus · Accepted Answer

The break-even point in total revenue can be calculated using the formula: Fixed Costs / (1 - Variable Cost Percentage). Here, it is $40 million / (1 - 0.75) = $160 million.

Babbling Brook Hospital Has Overall Variable Costs of 75% of Total