9. The North Kingstown Cancer Infusion expects tremendous growth over the next y

Question

9.   The North Kingstown Cancer Infusion expects tremendous growth over the next year and is projecting the following cost and rate structure for the service. Revenues are $750 per patient. Rent is $3600 per month; staff cost is $195,000 per month; leases are $10,000 per month; other fixed costs are $20,000 per month; pharmaceuticals are $500 per patient; intravenous supplies are $25 per patient; and other patient supplies are $25 per patient. Show your work.
a.   What volume of patients per month will it take for the center to breakeven?
b.   If the center needs to make a profit of $75,000 per month, what is the new volume per month?

Explanation / Answer

Hi,

Please find the detailed answer as follows:

Part A:

Break Even = Fixed Costs/(Revenue Per Patient - Variable Cost Per Patient) = (3600 + 195000 + 10000 + 20000)/(750 - 500 - 25 - 25) = 1143 Patients

Part B:

New Volume = (Fixed Cost + Desired Profit)/(Contribution Per Patient) = (3600 + 195000 + 10000 + 20000 + 75000)/(750 - 500 - 25 - 25) = 1518 Patients

Thanks.

Related Questions

Navigate

• Browse (All)
• Browse 9
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.