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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

Variable cost per service

Annual Direct Fixed cost

Annual Number of Visits

Basic Examination

$5.

$50,000

3,000

Advanced Examination

7

30,000

1,500

Therapy Session

10

40,000

500

1. Assume that the Audiology Department is allocated $100,00 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 cost must be covered? (To answer this question, assume that the allocation of overhead costs to each service is made on the basis of number of visits)

2.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.)

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