Question
7.2. The audiology department at Randall Clinic offers many services to the clinics patients. The three most common, along with cost and utilization data, are
7.2. The audiology department at Randall Clinic offers many services to the clinics patients. The three most common, along with cost and utilization data, are as follows: Service Basic examination Advanced examination Therapy session 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 a. What is the fee schedule for these services, 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 above. What is the fee schedule assuming that these overhead costs must be covered? (To answer this question, assume that the allocation of the $50,000 in overhead costs to each service is made on the basis of number of visits.) c. Assume that these 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 in the same way as overhead costs. Include the overhead costs from part b in developing the fee schedule.)
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