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Mark's Hospital contains 450 beds. The average occupancy rate is 80% per month. In other words, on average, 80% of the hospital's beds are occupied by patients. At this level of occupancy, the hospital's operating costs are $32 per occupied bed per day, assuming a 30-day month. This $32 figure contains both variable and fixed cost elements.
During June, the hospital's occupancy rate was only 60%. A total of $326,700 in operating cost was incurred during the month.
Required:
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