2. Suppose that the Audiology Department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: Service Basic examination Advanced examination Therapy session a. b. C. Variable Cost per Service $5 7 10 Annual Direct Fixed Costs $50,000 30,000 40,000 Annual Number of Visits 3,000 1,500 500 What is the fee schedule for these services (i.e., what prices should be charged), assuming that the goal is to cover only variable and direct fixed costs? Assume that the Audiology Department is allocated $100,000 in total over- head by the clinic, and the department director has allocated $50,000 of this amount to the three services listed earlier. What is the fee schedule, assum- ing that these overhead costs must be covered in addition to the variable and direct fixed costs? (To answer this question, assume that the allocation of the $50,000 in overhead costs to each of the three services is made on the basis of the number of visits.) Assume that these three services must make a combined profit of $25,000. Now, what is the fee schedule? (To answer this question, assume that the profit requirement is allocated to each of the three services in the same way as overhead costs. Include the overhead costs from part b when determining your answer.)

2. Suppose that the Audiology Department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: a. What is the fee schedule for these services (i.e., what prices should be charged), assuming that the goal is to cover only variable and direct fixed costs? b. Assume that the Audiology Department is allocated $100,000 in total overhead by the clinic, and the department director has allocated $50,000 of this amount to the three services listed earlier. What is the fee schedule, assum. ing that these overhead costs must be covered in addition to the variable and direct fixed costs? (To answer this question, assume that the allocation of the $50,000 in overhead costs to each of the three services is made on the basis of the number of visits.) c. Assume that these three services must make a combined profit of $25,000. Now, what is the fee schedule? (To answer this question, assume that the profit requirement is allocated to each of the three services in the same way as overhead costs. Include the overhead costs from part b when determining your answer.)