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

-The total fixed cost at the activity level of 7,700 patient-visits per month should be:
A)$123,970
B)$187,680
C)$212,520
D)$109,480

Question

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

-The total fixed cost at the activity level of 7,700 patient-visits per month should be:
A)$123,970 
B)$187,680 
C)$212,520 
D)$109,480

Quizplus · Accepted Answer

From the given information, we know that the total fixed cost at a volume of 10,000 patient-visits per month is $187,680. We can use this information along with the fact that fixed costs are constant to calculate the fixed cost at 7,700 patient-visits per month as follows:

Fixed cost at 7,700 patient-visits per month = (Fixed cost at 10,000 patient-visits per month / 10,000) x 7,700 
= ($187,680 / 10,000) x 7,700 
= $18.768 x 7,700 
= $144,873.6

Therefore, the closest choice is option D, which is $109,480.

Hettinger Hospital Bases Its Budgets on Patient-Visits