Assume that Painless Dental Clinics, Inc., offers three basic dental services. The following are its prices and costs. Variable Cost per Unit Cleaning Filling Capping Price per Unit $ 520 800 1,700 Units Sold per Year 8,000 1,600 $ 280 780 1,100 400 Variable costs include the labor costs of the dental hygienists and dentists. Fixed costs of $600,000 per year include building and equipment costs, marketing costs, and the costs of administration. Painless Dental Clinics is subject to a 25 percent tax rate on income. A cleaning "unit" is a routine teeth cleaning that takes about 45 minutes. A filling "unit" is the work done to fill one or more cavities in one session. A capping "unit" is the work done to put a crown on one tooth. If more than one tooth is crowned in a session, then the clinic counts one unit per tooth (e.g., putting crowns on two teeth counts as two units). Required: a. Given this information, how much will Painless Dental Clinics, Inc., earn each year after taxes? b. Assuming the given sales mix is the same at the break-even point, at what sales revenue does Painless Dental Clinics, Inc., break even? c. Assuming the given sales mix, at what sales revenue will the company earn $180,000 per year after taxes? d-1. Painless Dental Clinics, Inc., is considering becoming more specialized in cleanings and fillings. What would be the company's revenues per year if the number of cleanings increased to 11,000 per year, the number of fillings increased to 1,700 per year, while the number of cappings dropped to zero? With this change in product mix, the company would increase its fixed costs to $650,000 per year. What would be the effect of this change in product mix on the clinic's earnings after taxes per year? d-2. If the clinic's managers seek to maximize the clinic's after-tax earnings, would this change be a good idea? Complete this question by entering your answers in the tabs below. Reg A Req B ReqC Reg D1 Reg D2 Given this information, how much will Painless Dental Clinics, Inc., earn each year after taxes? Earnings Reg A Reg B Reqc Reg Di Reg D2 Assuming the given sales mix is the same at the break-even point, at what sales revenue does Painless Dental Clinics, Inc., break even? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) Break-even revenue Reg A Reg B Reg C Reg D1 Reg D2 Assuming the given sales mix, at what sales revenue will the company earn $180,000 per year after taxes? (Do not round intermediate calculations. Round your final answer to the nearest whole dollar.) Sales revenue Reg A Reg B Reg C Req D1 Req D2 Painless Dental Clinics, Inc., is considering becoming more specialized in cleanings and fillings. What would be the company's revenues per year if the number of cleanings increased to 11,000 per year, the number of fillings increased to 1,700 per year, while the number of cappings dropped to zero? With this change in product mix, the company would increase its fixed costs to $650,000 per year. What would be the effect of this change in product mix on the clinic's earnings after taxes per year? Show less Earnings Reg A Reg B Reg C Reg D1 Req D2 If the clinic's managers seek to maximize the clinic's after-tax earnings, would this change be a good idea? Yes ONO
