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Southwest Hospital has fixed costs of $100 million per year. Variable costs represent approximately 80% of the total revenue. There are 50,000 patient-days estimated for next year.
A) What is the break-even point expressed in total revenue?
B) What is the average daily revenue per patient necessary to break-even?
The process of using activity-based costs to help reduce or eliminate non-value-added activities and can be eliminated without affecting the desirability of the product from the perspective of the customer.
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