Assume that managers at good hospital are setting the price on a new outpatient service.

Here are relevant data estimates:

Variable cost per visit $48

Annual direct fixed costs $1,750,000

Annual overhead allocation $395,000

Expected annual utilization 35,000 visits

A. 1, What per visit price must be set for the service to breakeven? 2. To earn an annual profit of $275,000?

B. Repeat part A but assume that the variable cost per visit is $50