Question

The hospital budget for the first 6 months is set for an 80% occupancy rate. Budget figures for this level are listed below. The second six months will have an occupancy rate of 60%. What would the food cost budget be! for the second six months?

Food cost $30000
Labor cost $25000
Operating costs $24000
a. $20000
b. $22500
c. $30000
d. $32000

Answer 1

Assuming direct proportionality between occupancy rates and food cost budget, the food cost budget for the second six months at a 60% occupancy rate would be $22,500, which is 75% of the original budget based on the reduced occupancy from 80% to 60%.

Step-by-step explanation:

The food cost budget for the second six months, with a decreased occupancy rate, would be $22,500.

The original budget for an 80% occupancy rate set the food cost at $30,000. If we reduce the occupancy rate to 60%, this represents a reduction to 75% of the original occupancy rate (since 60% is 75% of 80%).

Therefore, we can infer that the budgeted costs should also decrease to 75% of their original amounts to maintain the same budget to occupancy ratio. To calculate this, we multiply the original food cost by 75% (or 0.75): $30,000 * 0.75 = $22,500.