Answer about 4-47

1. What are the fixed, variable, total, and average costs per patient for volumes of 100, 500, 1.500, 2,500, and 3.000? 2. Draw a graph of the average cost per patient. Plot cost on the vertical axis and the number of patients on the horizontal axis. 3. An outside organization, such as a health maintenance organization, offers to send JTC 500 patients per year but offers to pay only $300 for each one. Should JTC agree to this arrangement? It currently has 2,500 patients per year and can easily handle 3.000 4-47. Millbridge Township provides a variety of summer recreation alternatives. You can belong to the town pool, play tennis, or play golf. Summer passes allowing residents to use these facilities are sold each year. Twenty-five percent of the season passes that are purchased are golf passes, 35 percent are for tennis, and the rest are for the pool. The golf passes are $30, the tennis passes are $50, and the pool passes are $70. The cost of providing these services is mostly fixed, with a $3 variable cost per pass, regardless of type. The fixed cost of operating the summer recreation program is $250,000. How many people must buy recreation passes for the town to break even? How many passes would be sold for the pool at that break-even volume? 4-48.Calabrese City allocates some indirect or overhead costs to each of its police stations. The city charges each station for common services such as the city food service and for administrative services such as payroll. For the coming year, the Washington Square Police Station (WSPS) will have a total budget allocation of $1.4 million. That will be its only revenue. All direct and indirect charges have to be paid from that budgeted amount. Each police station must pay $100,000 for processing its payroll. In addition, once arrests are made, the prisoners spend a day or two in the local police station, where the city must feed them. On average, the city food service charges each police station $40 for meal service for each arrest. WSPS would like to maximize its number of arrests to reduce the number of criminals on the street. However, more arrests require not only more food, but also more police officers. The personnel employed by WSPS are supervisors, desk clerks, and police officers. The minimum staffing levels based on total budgeted arrests are as follows: Annual Number of Arrests 0-1,000 Police Officers Desk Clerks Supervisors 11 6 2. 6 2 12 NN 12 7 2 1,001-2,000 2,001-3,000 3,001-4,000 8 13 3