Purpose
The purpose of this assignment is to provide learners with the opportunity to develop break-even-analysis skills.
Week 5 Break Even Analysis Assignment and Guidelines V2 (Links to an external site.)
Due Date: Sunday 11:59 p.m. MT at the end of Week 5
Students are given the opportunity to request an extension on assignments for emergent situations. Supporting documentation must be submitted to the assigned faculty. If the student’s request is not approved, the assignment is graded and a late penalty is applied as follows:
- Monday = 10% of total possible point reduction
- Tuesday = 20% of total possible point reduction
- Wednesday = 30% of total possible point reduction
If the student’s request is approved, the student will be informed of the revised due date. Should the student fail to meet the revised due date, the assignment is graded and a late penalty is applied as follows:
- Monday = 10% of total possible point reduction
- Tuesday = 20% of total possible point reduction
- Wednesday = 30% of total possible point reduction
Total Points Possible: 100
Requirements
Answer the questions and complete the calculations required for the assignment.
Submit your answers on a Word document, with the heading of Week 5 Assignment. For the questions requiring a written response, answer directly on the assignment and adhere to proper grammar and syntax, and provide references. For the questions requiring calculations, show all of your work and follow the format that has been provided for the calculations in the lesson for Week 5. In addition, further explanations and formulas on the break-even analysis are contained in the required reading resources.
Key points for calculations
- When performing calculations, standard rounding rules apply. If the number to the right of the decimal is less than 0.5, round down to the nearest whole number, e.g., 33.4 = 33 If the number to the right of the decimal is 0.5 or greater, round up to the nearest whole number, e.g. 33.5 =34.
- Read the question carefully. Pay close attention to the units be asked and keep them consistent. For example, days vs months vs years; charges vs contribution margin; dollars vs percentage
- Provide ALL formulas with references. Designate which formula associates with which source. It is not sufficient to simply list the source at the beginning of the section. Write out the formula used BEFORE filling in the numbers. Formulas used should be taken from one of the required resources for this course.
Example: Total Contribution Margin (CM) = Contribution margin (CM) category 1 + CM cat 2 + CM 3
Leger, J.M. & Dunham-Taylor, J. (2018). Financial management for nurse managers: Merging the heart with the dollar, 4 th Ed. Burlington, MA: Jones-Bartlett.
Rubric
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Approach to Break-Even Analysis
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Calculate the number of patients per category served at the fertility clinic per year and per day.
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Calculate the contribution margin for each type of patient served at the fertility clinic
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Calculate the number of days to break-even point.
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Calculate the break-even quantity (number of visits)
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Analysis of break-even analysis
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Writing conventions, format, references
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Late Deductions
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Total Points: 100
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SOLUTION
Break-Even Analysis Case Study
- It is significant to make accurate analysis of the possible future expenditures and profits to assess the effectiveness of the fertility clinic service before establishing it. A break-even analysis is the original investment examination which brings about neither a benefit nor a loss. Furthermore, it helps to understand the project’s worth in the initial stage. It counts the quantity of deals expected to cover all factor and fixed expenses. It figures the base number of units to sell, and the business volume expected to pay all costs prior to making a benefit (Hatch, 2017).
For this reason, break-even analysis can help assume the viability of the proposed service. My approach is to start from finding number of visits, charges per year, as well as per single day for each acuity category. In order to calculate break-even analysis, it is necessary to know fixed costs, average price, and variable costs. Therefore, before estimating it, I need to find average price for the calculation. Contribution margin is another variable which is necessary for the business plan construction.
- The following table (Table 1) illustrates all the calculations needed for the break-even analysis.
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