(Answered) In option one the payroll for nurses is a step-function

Accounting

In Option one, the payroll for nurses is a step-function cost
In Option two, the payroll for nurses is a variable cost

BE for Option One
200x = (9000 + 5500) + 30x
200x = 14500 + 30x
170x = 14500
BE point = 86 visits

We don't have to continue calculating because 83 visits equates to 14 days - You get that by calculating: = 83 visits / 6 visits per day. The relevant range for this one is 0 - 20 days because that is what one nurse can handle.

BE for Option Two
200x = 9000 + 100x
100x = 9000
BE point = 90 visits

1. Calculate the Breakeven point for each option. Specifically discuss why these breakeven volumes differ. a

2. Which option is preferable? Why?

3. Assuming the quarterly data represent the pattern for the upcoming year, how should Mr. Hoover staff the division so as to maximize the VNA's surplus? Consider the seasonal volume discussed in the case.

4. What other factors or options should Mr. Hoover consider? Think outside of the box.

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