Determine the number of knee replacements (in units) that particular wing must perform each month to break even. (Break-Even Point or BEP). In other words how many knee replacements must the surgeon perform each month to break-even?

In order to determine the number of knee replacements that must be performed each month to break-even, we must first calculate the total fixed costs associated with the particular wing and then divide it by the unit contribution margin. Fixed costs are those which do not vary with production or sales volume and include things like rent ($15,500), insurance, salaries ($25,000), etc. The unit contribution margin is calculated by subtracting all variable costs from revenue per unit sold. Variable costs fluctuate in relation to production/sales volumes and include things like materials (costing $9,500) and labor used for each procedure as well as selling expenses ($3,000).

Once these calculations have been made we can then use them to come up with a break-even point (BEP) in units for the particular wing. This represents the number of knee replacements that need to be performed each month in order for them to remain profitable. In this case, the BEP would be 7 since $17,000 -($9,500 +$3,000)= $4 500; therefore 15 500/4500 = 3 ,37 rounded off equals 7 .It is important for healthcare facilities such as this one to understand their BEP so that they can plan ahead in terms of staffing and resources needed in order to ensure profitability over time.