The accountant of Pearl Coast Medical Centre is evaluating ways to increase revenues. The financial objective of the centre is to operate at or just above its break-even point. The centre currently refers approximately 8000 patients each year to a nearby laboratory for a standard blood test. The laboratory charges $100 for each test. The equipment needed to perform the test can be leased by the centre for $80 000 per year, and a technician would have to be hired at an annual salary of $60 000. Other fixed annual costs for the tests are expected to be $24 000. The accountant estimates that the direct costs of performing each test (e.g. supplies) would be $20.

Required

A. If the centre charges $100 per test, how many tests must be performed each year to break even on the service?

B. Prepare a CVP graph based on a fee of $100 per test.

C. If the centre can perform 8000 tests per year, how much should be charged for each test to break even?

D. Assume that the centre wants to offsetlosses of $32 000 from another department with profit from the blood tests. If $100 per test is charged, how many patients must be treated annually?