What per visit price must be set for service to break even

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Assume that the managers of Kaibab Hospital are setting the price on a new outpatient service. Her are relevant data estimates:

Variable cost per visit $7.00

Annual Direct fixed costs $500,000

Annual overhead allocation $50,000

Espected 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 part a, but assume that the variable cost per visit is $10.

c. Return to the data given above. Again, repeat part a, but assume the direct fixed costs are $1,000,000.

Reference no: EM131360813

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