6. Assume that the managers of Fort Winton Hospitals are setting the price on a

Question

6. Assume that the managers of Fort Winton Hospitals are setting the price on a new outpatient service. Here are the relevant data estimates: Variable cost per visit $5.00 Annual direct fixed costs $500,000 Annual overhead allocation $50,000 Expected annual utilization 10,000 visits a. What per visit price must be set for the service to break even?? To earn an annual profit of $100,000 b. Repeat Question a, but assume that the variable cost per visit is $10 c. Return to the data given in the problem. Again repeat question1, but assume that direct fixed costs are $1,000,000 d. Repeat Question a assuming both a $10 variable cost and $1,000,000 in direct fixed costs

Explanation / Answer

The solution performs a Fixed Cost Analysis for a not-for-profit acute care facility and computes projected P&L statement
, breakeven point, required profit, agreeing on discount proposal decision.

A. what per visit price must be set for the service to break even? What price must be set to earn an annual profit of $100,000?

ANS: $60, $70

B. Repeat part A, but assume that the variable cost per visit is $10.

ANS: $65, 75

C. Return to the data given in the problem. Again repeat Part A, but assume that direct fixed costs are $1,000,000.

ANS: $110 ,$120

D. Repeat Part A assuming both a $10 variable cost and $1,000,000 in direct fixed

costs.

ANS : $115 ,$125

Related Questions

Navigate

• Browse (All)
• Browse 6
• Subjects

---

---

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