5.1 Assume the managers of the Fort Winton Hospital are setting the price on a new outpatient service. Here are the relevant data estimates:

Variable cost per visit $5.000

Annual direct fixed costs $500,000

Annual overhead allocation of $50,000

Expected Annual utilization 10,000 visits

1. What per-visit price must be set for the service to break-even? To earn an annual profit of $100,000?

2. Repeat part a, but assume that the variable cost per visit is $10.

3. Return to the data given in the problem. Again, repeat part a, but assume that direct fixed costs are $1,000,000.

4. Repeat part a assuming both a $10 variable cost and $2,000,000 in direct fixed costs