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Assume that the managers at Fort Winston Hospital are setting the price on a new outpatient service. 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 breakeven? Then to earn an annual profit of $100,000?

B. Repeat part a, but assume that the variable cost is $10.

C. Repeat part a assuming both a $10 variable cost and $1,000,000 in direct fixed costs.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M9995818

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