Columbia Hospital for Women is planning to expand its labor and delivery room facilities.Although variable costs per patient will remain unchanged,fixed costs will increase by 20 percent.Last year's costs are below.

Calculate the future total cost assuming 100 patients are expected each month.

Question

Columbia Hospital for Women is planning to expand its labor and delivery room facilities.Although variable costs per patient will remain unchanged,fixed costs will increase by 20 percent.Last year's costs are below.

Calculate the future total cost assuming 100 patients are expected each month.

Quizplus · Accepted Answer

To calculate the future total cost, we need to use the formula:
Total Cost = Total Fixed Cost + (Variable Cost x Number of Patients)

Last year's fixed cost was $20,000. This year, fixed costs will increase by 20%, so the new fixed cost will be:
$20,000 x 1.20 = $24,000

Variable costs per patient will remain unchanged, so it's still $50.

Putting everything together:
Total Cost = $24,000 + ($50 x 100)
Total Cost = $24,000 + $5,000
Total Cost = $29,000

Therefore, the best choice is B.

Columbia Hospital for Women Is Planning to Expand Its Labor