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3-26. The Free Health Care Center (FH) charges each patient $5.50 (not quite free after all, but pretty close). Due to rising costs, the center
3-26. The Free Health Care Center (FH) charges each patient $5.50 (not quite free after all, but pretty close). Due to rising costs, the center has been forced to consider raising this charge to $6.00 or $6.50. If the price goes up, fewer people will come to the center for care. At a price of $6.00 only 18,000 patients are expected, and at a price of $6.50 there will likely be only 16,000 patients. Prepare a flexible budget for the FH at prices of $5.50, $6.00, and $6.50. The variable cost per patient is $4, and the fixed costs of operating the center are $32,000. The FH currently expects to have about 20,000 patient visits. What do you recommend the clinic do? Why? (Flexible Budget) Inputs Price Volume Variable Cost Fixed Cost Price S $ $ 18,000 16,000 Volume Revenue 20.000 $ S ola Price x Volume S $ Less Fixed Cost Less Variable Cost Surplus/(Deficit) 01 0 0 Variable Cost x Volume SO $0 $0
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