Problem:

Seattle Grace Hospital plans to invest in a new piece of CT imaging equipment. The hospital estimates that it can bill $1,500 per scan. Preliminary market assessments indicate that demand will be fewer than 5,000 scans per year. The hospital is considering a scanner (scanner B) that will result in total fixed costs of $800,000 per year and would yield a profit of $450,000 per year if the hospital produced and billed for 5,000 scans.

Required:

Question: What is the estimated breakeven volume for scanner B (in number of scans)?

A) 3,200

B) 160

C) 834

D) 5,000

E) 250

Note: Please provide reasons to support your answer.