[Solved] Law Week 8 Assignment 2- Healthcare Finance

Assignment Prompt & Instructions

**files (5)**

– ## Week8Assignment2Instructions-HealthcareFinance.docx

– ## WeekEightAssignment2version2.pdf

– ## Week8Assignment2LearningResources-HealthcareFinance.docx

– ## USW1_MMHA_6400_Week08_HowToCalculateBreakEvenPoint.pdf

– ## USW1_MMHA_6400_Week08_breakEvenExcelTemplate.xlsx

**## Week8Assignment2Instructions-HealthcareFinance.docx**

**Week 8 Assignment 2**

**Healthcare Finance**

**Break-Even Point Formulas**

Before making hiring or purchasing decisions, healthcare 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:**

· To assist you with your work related to this Assignment and help you navigate this important skill, a Break-even Excel Tutorial has been added to this week’s Learning Resources. Please check your volume settings upon opening.

· 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 financial data provided to calculate break-even points.

· Refer to Chapter 11 of
_Gapinski’s Understanding Healthcare Financial Management_.

**Submit** the following:

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

**## WeekEightAssignment2version2.pdf**

Healthcare Financial Management and Economics

Week 8 Assignment 2 — Southeast Imaging

Center

Assignment 2: Break-Even Point Formulas

Before making hiring or purchasing decisions, healthcare 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 the Southeast Imaging Center and
calculate break-even points.

Scenario: Southeast Imaging Center is a small imaging center with two analogue film
or screen units. As the director of the center, Juanita Hernandez has been asked to
determine if the current staffing is correct for her place or should she add another
aide. She currently uses 2 mammography units, 2 Certified Technologists, and 1 aide.
She has analyzed the current costs and determined the following:

Reimbursement per screen $125

Equipment lease per month ($12,000 per machine) $24,000

Certified Technologists costs per mammography (2) @ $35 $70

Technologists aide per mammography $20

Variable cost per mammography $12

Equipment maintenance per month ($8,000 per machine) $16,000

To prepare for the Assignment:

Examine the Southeast Imaging Center scenario. Reflect on how you will use the
provided financial data to calculate break-even points. Refer to Chapter 11 of Gapinski’s
Understanding Healthcare Financial Management for additional guidance.

The Assignment:

Given the above information, use the “Week 8 Assignment 2 Break Even Excel
Template” to answer these items as a Department:

A. Solve for monthly volume to break even.
B. Solve for monthly volume needed to break even at desired $5,000 per month

profit level.
C. Solve for volume needed to break even at new reimbursement of $110 per

screen and no profit.
D. Solve for volume needed to break even with one(1) additional aide.

Your Assignment is due by Day 7 of Week 8.

© 2024 Walden University Page 1 of 1

**## Week8Assignment2LearningResources-HealthcareFinance.docx**

**Week 8 Assignment 2 Learning Resources**

**Healthcare Finance**

**Reading Requirements**

· Pink, G. H., & Song, P. H. (2020).
_Gapinski’s understanding healthcare financial management_(8th ed.). Health Administration Press.

· Chapter 8, “Lease Financing” (pp. 281–313)

· Chapter 9, “Cost of Capital” (pp. 317–358)

· Review: Chapter 11, “Financing and Ownership of Health Care Providers” (pp. 207–227)

· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)

**Note:** You will use these documents to complete the assignments for this week.

·
**Document:** [Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19546841?wrap=1) [Download Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19546841/download?download_frd=1)

·
**Document:** [How to Calculate Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19547064?wrap=1) [Download How to Calculate Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19547064/download?download_frd=1)

·
**Document:** [Week 8 Assignment 2 Break Even Excel Template (Excel spreadsheet)](https://waldenu.instructure.com/courses/226605/files/19546867?wrap=1)

**Required Media**

· Walden University, LLC. (2024). Break-even Excel tutorial [Video file]. Walden University Canvas.
[https://waldenu.instructure.com](https://waldenu.instructure.com/)

· Walden University, LLC. (2024). Break-even accounting [Video]. Walden University Canvas.
[https://waldenu.instructure.com](https://waldenu.instructure.com/)

**## USW1_MMHA_6400_Week08_HowToCalculateBreakEvenPoint.pdf**

© 2022 Walden University, LLC Page 1 of 2

How to Calculate Break-Even Point

One of the most important metrics for a business is knowing the break-even point.

Break-even is the calculation of how many items need to be sold, or services rendered,

before the business becomes profitable. At the break-even point, revenue is exactly

equal to total expenses, and there is no profit or loss. The break-even formula is:

(Price Per Unit × Quantity Sold) − (Variable Cost × Quantity Sold) − Fixed Costs

= Break-Even Point

Use the following scenario to calculate the break-even point for items sold or services

rendered for the 2 Sweet Candy Company. The goal is to find the Quantity of product

the company needs to sell to make sure each candy bar is profitable.

Scenario: The 2 Sweet Candy Company manufactures candy bars. The Price Per Unit

for each candy bar is $2. The Variable Costs per unit are $1.50. The Fixed Costs are

$50,000.

Step 1: Gather the following information to calculate the break-even point of a product:

• Price Per Unit = $2

• Quantity Sold = y

• Variable Costs = $1.50

• Fixed Costs = $50,000

Step 2: Input the information given into the break-even formula. For the unknown

Quantity Sold use y.

(Price Per Unit = $2 × Quantity Sold = y) − (Variable Costs = $1.50 × Quantity

Sold = y) − Fixed Costs = $50,000 = Break-Even = 0

Step 3: Start the calculations to solve for Quantity Sold (y) to find the Break-Even

Point (0).

($2 × y) − ($1.50 × y) − $50,000 = 0

($2 − $1.50) × y − $50,000 = 0

(.50) × y − $50,000= 0

$50,000 / .50 × y = 100,000

($2 × 100,000) − ($1.50 × 100,000) − $50,000 = 0

($200,000) − ($150,000) − $50,000 = 0

$50,000 − $50,000 = 0

Break-Even = 100,000 candy bars

© 2022 Walden University, LLC Page 2 of 2

Once you solve for the break-even point, you can determine other milestones, like how

many candy bars you’d need to sell to make a $70,000 profit.

($2 × 240,000) − ($1.50 × 240,000) − $50,000 = $70,000

($480,000 − $360,000) − $50,000 = $70,000

$120,000 − $50,000 = $70,000

To make a $70,000 profit, the 2 Sweet Candy Company will need to sell 240,000 candy

bars.

**## USW1_MMHA_6400_Week08_breakEvenExcelTemplate.xlsx**

## Week 8 Assignment 2 Template

| | | | | | | | | | | | | | | | | | | | | |
| — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| | | | | 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 |
| | | | | | | | | | | | | | | | | | | | | |
| Reimbursement A | | | | | Reimbursement B | | | | | Reimbursement C | | | | | Reimbursement D |
| | Per Mammography (P) | | | | | Per Mammography (P) | | | | | Per Mammography (P) | | | | | 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) |

| | | | Units | | | | | Units | | | | | Units | | | | | Units |

**## USW1_MMHA_6400_Week08_breakEvenExcelTemplate.xlsx**

## Week 8 Assignment 2 Template

| | | | | | | | | | | | | | | | | | | | | |
| — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| | | | | 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 |
| | | | | | | | | | | | | | | | | | | | | |
| Reimbursement A | | | | | Reimbursement B | | | | | Reimbursement C | | | | | Reimbursement D |
| | Per Mammography (P) | | | | | Per Mammography (P) | | | | | Per Mammography (P) | | | | | 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) |

| | | | Units | | | | | Units | | | | | Units | | | | | Units |

**## Week8Assignment2Instructions-HealthcareFinance.docx**

**Week 8 Assignment 2**

**Healthcare Finance**

**Break-Even Point Formulas**

Before making hiring or purchasing decisions, healthcare 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:**

· To assist you with your work related to this Assignment and help you navigate this important skill, a Break-even Excel Tutorial has been added to this week’s Learning Resources. Please check your volume settings upon opening.

· 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 financial data provided to calculate break-even points.

· Refer to Chapter 11 of
_Gapinski’s Understanding Healthcare Financial Management_.

**Submit** the following:

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

**## WeekEightAssignment2version2.pdf**

Healthcare Financial Management and Economics

Week 8 Assignment 2 — Southeast Imaging

Center

Assignment 2: Break-Even Point Formulas

Before making hiring or purchasing decisions, healthcare 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 the Southeast Imaging Center and
calculate break-even points.

Scenario: Southeast Imaging Center is a small imaging center with two analogue film
or screen units. As the director of the center, Juanita Hernandez has been asked to
determine if the current staffing is correct for her place or should she add another
aide. She currently uses 2 mammography units, 2 Certified Technologists, and 1 aide.
She has analyzed the current costs and determined the following:

Reimbursement per screen $125

Equipment lease per month ($12,000 per machine) $24,000

Certified Technologists costs per mammography (2) @ $35 $70

Technologists aide per mammography $20

Variable cost per mammography $12

Equipment maintenance per month ($8,000 per machine) $16,000

To prepare for the Assignment:

Examine the Southeast Imaging Center scenario. Reflect on how you will use the
provided financial data to calculate break-even points. Refer to Chapter 11 of Gapinski’s
Understanding Healthcare Financial Management for additional guidance.

The Assignment:

Given the above information, use the “Week 8 Assignment 2 Break Even Excel
Template” to answer these items as a Department:

A. Solve for monthly volume to break even.
B. Solve for monthly volume needed to break even at desired $5,000 per month

profit level.
C. Solve for volume needed to break even at new reimbursement of $110 per

screen and no profit.
D. Solve for volume needed to break even with one(1) additional aide.

Your Assignment is due by Day 7 of Week 8.

© 2024 Walden University Page 1 of 1

**## Week8Assignment2LearningResources-HealthcareFinance.docx**

**Week 8 Assignment 2 Learning Resources**

**Healthcare Finance**

**Reading Requirements**

· Pink, G. H., & Song, P. H. (2020).
_Gapinski’s understanding healthcare financial management_(8th ed.). Health Administration Press.

· Chapter 8, “Lease Financing” (pp. 281–313)

· Chapter 9, “Cost of Capital” (pp. 317–358)

· Review: Chapter 11, “Financing and Ownership of Health Care Providers” (pp. 207–227)

· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)

**Note:** You will use these documents to complete the assignments for this week.

·
**Document:** [Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19546841?wrap=1) [Download Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19546841/download?download_frd=1)

·
**Document:** [How to Calculate Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19547064?wrap=1) [Download How to Calculate Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19547064/download?download_frd=1)

·
**Document:** [Week 8 Assignment 2 Break Even Excel Template (Excel spreadsheet)](https://waldenu.instructure.com/courses/226605/files/19546867?wrap=1)

**Required Media**

· Walden University, LLC. (2024). Break-even Excel tutorial [Video file]. Walden University Canvas.
[https://waldenu.instructure.com](https://waldenu.instructure.com/)

· Walden University, LLC. (2024). Break-even accounting [Video]. Walden University Canvas.
[https://waldenu.instructure.com](https://waldenu.instructure.com/)

**## USW1_MMHA_6400_Week08_HowToCalculateBreakEvenPoint.pdf**

© 2022 Walden University, LLC Page 1 of 2

How to Calculate Break-Even Point

One of the most important metrics for a business is knowing the break-even point.

Break-even is the calculation of how many items need to be sold, or services rendered,

before the business becomes profitable. At the break-even point, revenue is exactly

equal to total expenses, and there is no profit or loss. The break-even formula is:

(Price Per Unit × Quantity Sold) − (Variable Cost × Quantity Sold) − Fixed Costs

= Break-Even Point

Use the following scenario to calculate the break-even point for items sold or services

rendered for the 2 Sweet Candy Company. The goal is to find the Quantity of product

the company needs to sell to make sure each candy bar is profitable.

Scenario: The 2 Sweet Candy Company manufactures candy bars. The Price Per Unit

for each candy bar is $2. The Variable Costs per unit are $1.50. The Fixed Costs are

$50,000.

Step 1: Gather the following information to calculate the break-even point of a product:

• Price Per Unit = $2

• Quantity Sold = y

• Variable Costs = $1.50

• Fixed Costs = $50,000

Step 2: Input the information given into the break-even formula. For the unknown

Quantity Sold use y.

(Price Per Unit = $2 × Quantity Sold = y) − (Variable Costs = $1.50 × Quantity

Sold = y) − Fixed Costs = $50,000 = Break-Even = 0

Step 3: Start the calculations to solve for Quantity Sold (y) to find the Break-Even

Point (0).

($2 × y) − ($1.50 × y) − $50,000 = 0

($2 − $1.50) × y − $50,000 = 0

(.50) × y − $50,000= 0

$50,000 / .50 × y = 100,000

($2 × 100,000) − ($1.50 × 100,000) − $50,000 = 0

($200,000) − ($150,000) − $50,000 = 0

$50,000 − $50,000 = 0

Break-Even = 100,000 candy bars

© 2022 Walden University, LLC Page 2 of 2

Once you solve for the break-even point, you can determine other milestones, like how

many candy bars you’d need to sell to make a $70,000 profit.

($2 × 240,000) − ($1.50 × 240,000) − $50,000 = $70,000

($480,000 − $360,000) − $50,000 = $70,000

$120,000 − $50,000 = $70,000

To make a $70,000 profit, the 2 Sweet Candy Company will need to sell 240,000 candy

bars.

**## USW1_MMHA_6400_Week08_breakEvenExcelTemplate.xlsx**

## Week 8 Assignment 2 Template

| | | | | | | | | | | | | | | | | | | | | |
| — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| | | | | 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 |
| | | | | | | | | | | | | | | | | | | | | |
| Reimbursement A | | | | | Reimbursement B | | | | | Reimbursement C | | | | | Reimbursement D |
| | Per Mammography (P) | | | | | Per Mammography (P) | | | | | Per Mammography (P) | | | | | 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) |

| | | | Units | | | | | Units | | | | | Units | | | | | Units |

**## Week8Assignment2Instructions-HealthcareFinance.docx**

**Week 8 Assignment 2**

**Healthcare Finance**

**Break-Even Point Formulas**

Before making hiring or purchasing decisions, healthcare 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:**

· To assist you with your work related to this Assignment and help you navigate this important skill, a Break-even Excel Tutorial has been added to this week’s Learning Resources. Please check your volume settings upon opening.

· 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 financial data provided to calculate break-even points.

· Refer to Chapter 11 of
_Gapinski’s Understanding Healthcare Financial Management_.

**Submit** the following:

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

**## WeekEightAssignment2version2.pdf**

Healthcare Financial Management and Economics

Week 8 Assignment 2 — Southeast Imaging

Center

Assignment 2: Break-Even Point Formulas

Before making hiring or purchasing decisions, healthcare 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 the Southeast Imaging Center and
calculate break-even points.

Scenario: Southeast Imaging Center is a small imaging center with two analogue film
or screen units. As the director of the center, Juanita Hernandez has been asked to
determine if the current staffing is correct for her place or should she add another
aide. She currently uses 2 mammography units, 2 Certified Technologists, and 1 aide.
She has analyzed the current costs and determined the following:

Reimbursement per screen $125

Equipment lease per month ($12,000 per machine) $24,000

Certified Technologists costs per mammography (2) @ $35 $70

Technologists aide per mammography $20

Variable cost per mammography $12

Equipment maintenance per month ($8,000 per machine) $16,000

To prepare for the Assignment:

Examine the Southeast Imaging Center scenario. Reflect on how you will use the
provided financial data to calculate break-even points. Refer to Chapter 11 of Gapinski’s
Understanding Healthcare Financial Management for additional guidance.

The Assignment:

Given the above information, use the “Week 8 Assignment 2 Break Even Excel
Template” to answer these items as a Department:

A. Solve for monthly volume to break even.
B. Solve for monthly volume needed to break even at desired $5,000 per month

profit level.
C. Solve for volume needed to break even at new reimbursement of $110 per

screen and no profit.
D. Solve for volume needed to break even with one(1) additional aide.

Your Assignment is due by Day 7 of Week 8.

© 2024 Walden University Page 1 of 1

**## Week8Assignment2LearningResources-HealthcareFinance.docx**

**Week 8 Assignment 2 Learning Resources**

**Healthcare Finance**

**Reading Requirements**

· Pink, G. H., & Song, P. H. (2020).
_Gapinski’s understanding healthcare financial management_(8th ed.). Health Administration Press.

· Chapter 8, “Lease Financing” (pp. 281–313)

· Chapter 9, “Cost of Capital” (pp. 317–358)

· Review: Chapter 11, “Financing and Ownership of Health Care Providers” (pp. 207–227)

· Review: Chapter 13, “Financial Condition Analysis” (pp. 507–548)

**Note:** You will use these documents to complete the assignments for this week.

·
**Document:** [Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19546841?wrap=1) [Download Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19546841/download?download_frd=1)

·
**Document:** [How to Calculate Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19547064?wrap=1) [Download How to Calculate Break Even Point (PDF)](https://waldenu.instructure.com/courses/226605/files/19547064/download?download_frd=1)

·
**Document:** [Week 8 Assignment 2 Break Even Excel Template (Excel spreadsheet)](https://waldenu.instructure.com/courses/226605/files/19546867?wrap=1)

**Required Media**

· Walden University, LLC. (2024). Break-even Excel tutorial [Video file]. Walden University Canvas.
[https://waldenu.instructure.com](https://waldenu.instructure.com/)

· Walden University, LLC. (2024). Break-even accounting [Video]. Walden University Canvas.
[https://waldenu.instructure.com](https://waldenu.instructure.com/)

**## USW1_MMHA_6400_Week08_HowToCalculateBreakEvenPoint.pdf**

© 2022 Walden University, LLC Page 1 of 2

How to Calculate Break-Even Point

One of the most important metrics for a business is knowing the break-even point.

Break-even is the calculation of how many items need to be sold, or services rendered,

before the business becomes profitable. At the break-even point, revenue is exactly

equal to total expenses, and there is no profit or loss. The break-even formula is:

(Price Per Unit × Quantity Sold) − (Variable Cost × Quantity Sold) − Fixed Costs

= Break-Even Point

Use the following scenario to calculate the break-even point for items sold or services

rendered for the 2 Sweet Candy Company. The goal is to find the Quantity of product

the company needs to sell to make sure each candy bar is profitable.

Scenario: The 2 Sweet Candy Company manufactures candy bars. The Price Per Unit

for each candy bar is $2. The Variable Costs per unit are $1.50. The Fixed Costs are

$50,000.

Step 1: Gather the following information to calculate the break-even point of a product:

• Price Per Unit = $2

• Quantity Sold = y

• Variable Costs = $1.50

• Fixed Costs = $50,000

Step 2: Input the information given into the break-even formula. For the unknown

Quantity Sold use y.

(Price Per Unit = $2 × Quantity Sold = y) − (Variable Costs = $1.50 × Quantity

Sold = y) − Fixed Costs = $50,000 = Break-Even = 0

Step 3: Start the calculations to solve for Quantity Sold (y) to find the Break-Even

Point (0).

($2 × y) − ($1.50 × y) − $50,000 = 0

($2 − $1.50) × y − $50,000 = 0

(.50) × y − $50,000= 0

$50,000 / .50 × y = 100,000

($2 × 100,000) − ($1.50 × 100,000) − $50,000 = 0

($200,000) − ($150,000) − $50,000 = 0

$50,000 − $50,000 = 0

Break-Even = 100,000 candy bars

© 2022 Walden University, LLC Page 2 of 2

Once you solve for the break-even point, you can determine other milestones, like how

many candy bars you’d need to sell to make a $70,000 profit.

($2 × 240,000) − ($1.50 × 240,000) − $50,000 = $70,000

($480,000 − $360,000) − $50,000 = $70,000

$120,000 − $50,000 = $70,000

To make a $70,000 profit, the 2 Sweet Candy Company will need to sell 240,000 candy

bars.

**## USW1_MMHA_6400_Week08_breakEvenExcelTemplate.xlsx**

## Week 8 Assignment 2 Template

| | | | | | | | | | | | | | | | | | | | | |
| — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — | — |
| | | | | 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 |
| | | | | | | | | | | | | | | | | | | | | |
| Reimbursement A | | | | | Reimbursement B | | | | | Reimbursement C | | | | | Reimbursement D |
| | Per Mammography (P) | | | | | Per Mammography (P) | | | | | Per Mammography (P) | | | | | 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) |

| | | | Units | | | | | Units | | | | | Units | | | | | Units |