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3. [18 pts] The cardiology department at Fishtown Medical Group offers three services. Independence Blue Cross pays for these services on a fee-for-service basis. a.
3. [18 pts] The cardiology department at Fishtown Medical Group offers three services. Independence Blue Cross pays for these services on a fee-for-service basis. a. Calculate the price that Fishtown should set for each service, if they want to exactly cover direct variable costs and direct fixed costs. b. Assume that $50,000 in indirect costs is allocated to the cardiology department. The cost driver is the number of services. Calculate the price that Fishtown should set for each service, if they want to exactly cover total costs. c. Fishtown now wants to make a combined profit of $25,000 on these three services. Assume that this profit requirement can be allocated in the same manner as indirect costs were. Calculate the price that Fishtown should set for each service, if they want to achieve the required amount of profit and cover total costs
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