Setting the price on new outpatient service

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Reference no: EM131864349

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

Variable cost per visit $28.50

Annual Direct Fixed Costs $850,000

Annual Overhead Allocation $225,000

Expected Annual Utilization 76,000 visits

A. 1. 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 $750,000.

D. Repeat Part a assuming both a $30 variable cost and $750,000 in direct fixed costs.

Reference no: EM131864349

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