Question : 54) A hospital receives $1,000,000 monthly in funding from various : 1196226

54) A hospital receives $1,000,000 monthly in funding from various sources. Annual fixed costs are projected to be $5,000,000 and the variable cost per patient, across all departments is projected to be $534.80.

Last year they treated 11,500 patients. The hospital expects a 5% increase in patients this year.

A governing bylaw requires that the hospital be run as a non-profit organization.

What is the maximum number of patients the hospital can expect to be able to treat assuming the operating income is zero? 54) ______ A) 12,079 B) 11,500 C) 13,000 D) more than 13,000 E) CVP analysis is not relevant for non-profit organizations.

55) A social agency receives a budget appropriation of $11,000 monthly from the municipality.

Annual fixed costs are projected to be $20,000 and the variable cost per client was $238.50 last year.

Although the agency projects its case load to increase by the usual 15% this year (as it has done historically), the municipality appropriated funds based on last year’s case load.

Which of the following strategies would be ineffective in dealing with the expected shortfall in budget appropriation for the agency? 55) ______ A) reducing the number of clients served B) reducing the total fixed costs C) increasing funding from other sources D) changing the measure of output used to calculate service E) reducing the variable cost of serving a client

56) Which of the following statements about contribution margin and gross margin in CVP analysis is TRUE? 56) ______ A) gross margin equals total revenue minus cost of goods sold B) contribution margin equals total revenue minus cost of goods sold C) service companies can compute a gross margin but not a contribution margin D) contribution margin equals total revenue minus non-variable costs E) gross margin equals total revenue minus non-variable costs

57) The agency supervisor of a nonprofit organization wants to know how many individuals may receive financial assistance during the year. The organization has fixed costs of $600,000. They aid the unemployed by supplementing their incomes by $8,000 annually, while they seek new employment skills. The budgeted appropriation for the year is $2,000,000. 57) ______ A) 175 people B) 75 people C) 100 people D) 130 people E) 50 people

58) Fan Inc. is a nonprofit organization that supplies fans during the summer for individuals in need. Fixed costs are $500,000. The fans cost $40.00 each. The organization has a budgeted appropriation of $1,200,000. How many people can receive a fan during the summer? 58) ______ A) 15,000 people B) 80,000 people C) 42,500 people D) 17,500 people E) 30,000 people

59) Gross margin in a merchandising organization is considered to be 59) ______ A) all revenues less costs which do not change with respect to an output-related driver. B) all revenues plus costs which change with respect to an output-related driver. C) the same as the contribution margin. D) all revenues less cost of goods sold. E) all revenues.

60) Comparing contribution margin [CM] to Gross margin [GM], which of the following is TRUE? 60) ______ A) In the merchandising sector, CM and GM are equivalent terms B) If Cost of goods sold does not include any fixed costs, then CM will equal GM. C) CM is computed after all variable costs are deducted, but GM is computed by deducting only cost of goods sold from revenues. D) If Cost of goods sold includes fixed costs, then CM will exceed GM. E) If CM and GM remain constant from one period to the next, operating income has to remain constant as well.

Use the information below to answer the following question(s).

Big Sports University is planning to hold a fundraising banquet at one of the local country clubs. It has two options for the banquet:

1.Foothills Country Club

a.Fixed rental cost of $600,

b.plus $15.00 per person for food.

2.Downhill Country Club

a.Fixed rental cost of $1,080.

b.It will have to hire a caterer who charges $12.00 per person for food.

Big Sports has budgeted $900 for administrative and marketing expenses. It plans to hire a band, which will cost another $400. Tickets are expected to be $40 per person. Any other items required for the event will be donated by its local business supporters.

61) What is the breakeven point in tickets sold of option one? 61) ______ A) 85 tickets B) 170 tickets C) 70 tickets D) 80 tickets E) 76 tickets

62) The breakeven point in tickets sold of option two? 62) ______ A) 82 tickets B) 80 tickets C) 76 tickets D) 70 tickets E) 85 tickets

63) What is the “operating income” assuming 250 people attend and option one is chosen? 63) ______ A) $4,400 B) $3,218 C) $4,000 D) $3,915 E) $4,350