Use the budgeted data to calculate the break-even point in

Reference no: EM13601004

Dr Jones is a radiologist at Olympic Hospital, and he has estimated the following costs for his Radiology Department for next year:

Materials $10 per film
Radiologists' salaries $380,000
Technicians' salaries 180,000
Office staff salaries 20,000
Supplies 80,000
Depreciation on equipment 60,000
Rental 30,000

This budget is based on an estimate of 25,000 films being processed next year using the current X-ray machines, which will be operating at their maximum capacity. These machines originally cost $200,000 each when they were purchased 10 years ago. The average fee charged to clients for processing a film is $50.

Dr Jones is considering the purchase of an additional X-ray machine, which will cost $750,000 and is expected to last for 3 years. This purchase would increase the capacity of the department by 50,000 films per year. As this machine can process more intricate films, the average fee for each film is expected to be $60. An additional technician would need to be hired to operate the machine at a cost of $80,000 and the cost of supplies would increase by $90,000 per year. Materials for this machine will be $16 per film.

Required (show all workings):

1. Use the budgeted data to calculate the break-even point in number of films, and the budgeted profit of the department, assuming the new machine is NOT purchased.

2. What is the break-even point if the new machine IS purchased? (Assume a sales mix based on the maximum capacity).

3. What will be the new budgeted profit, assuming the department operates at full capacity?

Reference no: EM13601004

Questions Cloud

In october 5000 meters of raw material were purchased at an : in october 5000 meters of raw material were purchased at an actual cost of 4.50 per meter. during october 4850 meters

Acme company used a predetermined overhead rate of 36 per : acme company used a predetermined overhead rate of 36 per direct labor hour for the year. assume the only inventory

This year barney purchased 500 shares of bell common stock : this year barney purchased 500 shares of bell common stock for 20 per share. at year - end the bell shares were only

Airborne manufacturing co completed the following : airborne manufacturing co completed the following transactions during 2009 jan 16 declared a cash dividend on the 4 102

Use the budgeted data to calculate the break-even point in : dr jones is a radiologist at olympic hospital and he has estimated the following costs for his radiology department for

Obtain the annual reports of five well known companies you : obtain the annual reports of five well known companies. you can vist the web site for this bookor the sec edgar

Altex inc manufactures two products car wheels and truck : altex inc. manufactures two products car wheels and truck wheels. to determine the amount of overhead to assign to each

On june 1 2012 sam purchased new farm machinery for 50000 : 1. on june 2 2010 freds tv sales sold mark a large hd tv on account for 12000. freds tv sales uses the accrual method.

Madeira travel services provides travel agents access to : madeira travel services provides travel agents access to sophisticated travel information and analysis systems over the

User Account

All Pages