Question

Memorial Hospital CEO conducts performance reviews of the hospital's departments and discovered that the average cost of deliveries ($5,000) was above their average revenue, and that the hospital was losing $700 on each delivery. From the information on how much the hospital is losing on deliveries, what is the change in profit for each extra delivery

Answer 1

Memorial Hospital

From the information on how much the hospital is losing on deliveries, the change in profit for each extra delivery is:

= 16.3%.

Step-by-step explanation:

a) Data and Calculations:

Average cost of deliveries = $5,000

Average revenue per delivery = $4,300 ($5,000 - $700)

Loss on each delivery = $700

The change in profit for each extra delivery is

= 16.3% ($700/$4,300 * 100)

b) The implication of the above information is that the hospital is losing 16.3% each time it performs a delivery because it cost it $5,000 while it can only receive $4,300 from each patient delivered.