## Break-Even Point Formulas

Description

Given the imaging center scenario and financial data, complete the “Week 8 Assignment 2 Break Even Excel Template”.

Given the imaging center scenario and financial data, create an Excel spreadsheet showing the following:

-Solve for monthly volume to break even.

-Solve for monthly volume needed to break even at desired $5,000 per month profit level.

-Solve for volume needed to break even at new reimbursement of $55 per screen and no profit.

Solve for volume needed to break even with additional labor.

Before making hiring or purchasing decisions, health care organizations must consider whether the decision is financially profitable. By calculating break-even points, organizations are able to examine actual costs and make more sound financial decisions. For this Assignment, you use data from an imaging center and calculate break-even points.

To prepare for this Assignment:

Review the Week 8 Assignment 2 document provided to you by the Instructor. Examine the imaging center scenario. Reflect on how you will use the provided financial data to calculate break-even points. Refer to Chapter 9 of Financial Management of Health Care Organizations: An Introduction to Fundamental Tools, Concepts and Applications for additional guidance.

Break-Even Point

Part a. Part b. Part c. Part d.

Givens From Problem: Costs Dollars No. Dollars No. Dollars No. Dollars No.

A

B

C

D

E

F

G

H

I

A B C D

Reimbursement Reimbursement Reimbursement Reimbursement

Per Mammography (P)

Fixed Costs Fixed Costs Fixed Costs Fixed Costs

Total Fixed Costs (TFC) Total Fixed Costs (TFC) Total Fixed Costs (TFC) Total Fixed Costs (TFC)

Variable Costs Variable Costs Variable Costs Variable Costs

Variables Costs based on Dollar Amount per Unit Variables Costs based on Dollar Amount per Unit Variables Costs based on Dollar Amount per Unit Variables Costs based on Dollar Amount per Unit

Sum: Sum: Sum: Sum:

Break-Even Point Break-Even Point Break-Even Point Break-Even Point

Break-Even Units (X) X = TFC / (P – V) Break-Even Units (X) X = TFC / (P – V) Break-Even Units (X) X = TFC / (P – V) Break-Even Units (X) X = TFC / (P – V)

Targeted Profit Targeted Profit Targeted Profit Targeted Profit

Targeted Profit (TF) Targeted Profit (TF) Targeted Profit (TF) Targeted Profit (TF)

Units required to reach targeted TF, X = (TFC + TF) / (P-V) Units required to reach targeted TF, X = (TFC + TF) / (P-V) Units required to reach targeted TF, X = (TFC + TF) / (P-V) Units required to reach targeted TF, X = (TFC + TF) / (P-V)