1. Hospital Supply Case Study
INTRODUCTION
The case is about manufacturing company, Hospital Supply, Inc., that produced hydraulic hoists
for the local market. The hydraulic hoist is useful to the hospital for moving bedridden patients.
Most of sales made to local hospitals. Significant to activity of sales and production of hydraulic
hoist, there are costs incurred due to the consumption of resources. Presented in Exhibit 1 are the
costs of manufacturing and marketing hydraulic hoists at the company’s normal volume of 3,000
units per month:
Exhibit 1 – Cost per Unit for Hydraulic Hoists.
Cost per Unit for Hydraulic Hoists.
Unit manufacturing cost:
Variable materials $550
Variable labor $825
Variable overhead $420
Fixed overhead $660
Total unit manufacturing cost $2455
Unit marketing costs:
Variable $275
Fixed $770
Total unit marketing costs $1045
Total unit cost $3500
STATEMENT OF PROBLEM
The overall case is about how Hospital Supply, Inc. can optimize its profit under various
situations. Since profit results from the exceeds amount of sales income compare to the costs,
therefore understanding the changes in sales volume, selling price and cost are very important to
facilitate in making right decision.
OBJECTIVES
Referring to the scenarios given below, this study helps to achieve the following objectives:
1. To understand the relationship between sales components and costs that will affect the
Hospital Supply, Inc.’s profit.

2. 2. To understand the significant of breakeven point that will lead Hospital Supply, Inc. to
achieve profitable performance.