Question
Assume that the managers of Fort Winston Hospital are setting the price on a a new out-patient service. Here are the relevant data estimate: Variable
Assume that the managers of Fort Winston Hospital are setting the price on a a new out-patient service. Here are the relevant data estimate: Variable costs per visit: $5.00 Annual direct fixed costs: $500,000 Annual overhead allocation: $50,000 Expected annual utilization: 10,000 visits. a. what per visit price must be set to break even? To earn an annual profit of 100,000? b. Repeat Part a, but assume that the variable cost rate is $10. c. Return to the data given in the problem. Again repeat Part a, but assume the direct fixed costs are $1,000,000 d. Repeat Part a assuming both a $10 variable cost and $1,000,000 fixed costs.
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