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Assume that a radiology group has the following cost structure: Fixed costs: $750,000 Variable cost per procedure: $40 Furthermore, assume that the group expects to

Assume that a radiology group has the following cost structure:

Fixed costs: $750,000 Variable cost per procedure: $40

Furthermore, assume that the group expects to perform 10,000 procedures in the coming year.

  1. Define fixed and variable costs and provide examples for each.
  2. What are the groups expected total costs?
  3. What are the groups expected total costs at 7,000 procedures?
  4. What is the average cost per procedure at 7,000 procedures? At 10,000 procedures? What explains the difference?

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