Question

You run a hospital with 100 rooms. Fixed daily cost is $817.00 which includes staff salary, property charges, maintenance etc. Variable cost per room is $19.00 which includes cleaning, equipment rentals, utility cost etc. which is incurred only when the room is full. You charge $59.00 per room per day. You sold 42.00 rooms today, how much profit/loss did you earn for today.

Answer 1

To calculate the profit or loss for the day, we need to determine both the total revenue and the total costs.

1. Calculate Total Revenue: \[ \text{Total Revenue} = \text{Number of Rooms Sold} \times \text{Charge per Room} \] \[ \text{Total Revenue} = 42 \text{ rooms} \times 59 \text{ dollars/room} = 2478 \text{ dollars} \]

2. Calculate Total Costs: Total costs consist of fixed costs and variable costs.

   • Fixed cost: This is constant regardless of the number of rooms sold. \[ \text{Fixed Cost} = 817 \text{ dollars} \]
   • Variable cost: This is incurred only when the rooms are in use. \[ \text{Variable Cost} = \text{Number of Rooms Sold} \times \text{Variable Cost per Room} \] \[ \text{Variable Cost} = 42 \text{ rooms} \times 19 \text{ dollars/room} = 798 \text{ dollars} \]

   Now, we can calculate the total costs: \[ \text{Total Costs} = \text{Fixed Cost} + \text{Variable Cost} \] \[ \text{Total Costs} = 817 \text{ dollars} + 798 \text{ dollars} = 1615 \text{ dollars} \]

3. Calculate Profit/Loss: \[ \text{Profit/Loss} = \text{Total Revenue} - \text{Total Costs} \] \[ \text{Profit/Loss} = 2478 \text{ dollars} - 1615 \text{ dollars} = 863 \text{ dollars} \]

The profit earned for today is $863.00.