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Galina-37 [17]
3 years ago
9

Let us suppose that a hospital wants to set their fees for an overnight stay such that the contribution margin on a hospital roo

m will be 18%. The cost to the hospital of an overnight stay (staff, physical equipment, and supplies) is $620. What fee should they charge to obtain a contribution margin of 18%?
Business
1 answer:
Rainbow [258]3 years ago
3 0

Answer: $756

Explanation:

Based on the information given in the question, the fee that should be charged to obtain a contribution margin of 18% will be:

Target fee = Variable cost/(1-Contribution Margin)

= $620/(1 - 18%)

= $620/(82%)

= $620/0.82

= $756

They should charge $756

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