Basic BEP Examples

1. A hospital specializes in the treatment of cancer patients. The average variable cost per
treatment visit is Rs. 4,000. The average amount charged to the patients per visit is Rs. 6,000.
The annual fixed cost for the hospital is Rs. 400,00,000. The hospital expects a total of 30,000
patient visits per annum. Calculate the BEP and Margin of Safety for the hospital.

2. An OPD facility on an average charges Rs 200 per patient visit for treating common ailments. The
pure variable costs per visit in terms of medical supplies used amount to Rs. 30 per patient visit.
The pure Fixed Costs to run the OPD amount to Rs. 600,000. Additionally the OPD provided us
with the following data for doctor charges:

Patient Visit Total Charge

2000 2,40,000
2500 2,90,000
3000 3,20,000
3500 3,40,000
4000 3,70,000
4500 4,00,000
5000 4,20,000
Calculate the BEP for the hospital.

3. A hospital is currently using an old X-Ray machine and there is a proposal to switch to a newer
model. The variable cost per unit and total fixed cost associated with the current X-ray machine
are Rs. 100 p.u. and Rs 300,000 respectively. The variable cost per unit and total fixed cost
associated with the new X-ray machine are Rs. 80 p.u. and Rs 400,000 respectively. The revenue
generated per patient visit is Rs. 150. At what utilization level should the company shift from the
old machine to the new machine?