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What per visit price must be set for service to breakeven

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Reference no: EM131323182

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

Variable cost per visit                         $27.00

Annual Direct Fixed Costs                 $750,000

Annual Overhead Allocation              $125,000

Expected Annual Utilization              45,000 visits

a. What per visit price must be set for the service to breakeven? 2.To earn an annual profit of $75,000?

b. Repeat Part a, but assume that the variable cost per visit is $30.

c. Return to the original data given in the problem. Again repeat Part a, but assume that direct fixed costs are $650,000.

d. Repeat Part a assuming both a $30 variable cost and $650,000 in direct fixed costs.

Reference no: EM131323182

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