Instant Testing, a virus testing service company, has a test facility in Binghamton area. The fixed costs are $120,000 per year. Total variable cost for each test, including costs of technician, materials and utilities, is estimated to be $200.

The company estimates that there would be 1200 tests done on an average at their facility per year.

1. Estimate the total average cost per test for InstantTesting.
2. Assume that the capacity of the facility is 2000 tests per year. If half-way through the year, an insurance company talks to the company to see if the testing service company can take 500 additional cases for the rest of the year, and the insurance company is willing to pay a price of $240 per test. The testing company thinks that they have enough capacity until the end of the year to accommodate those additional tests. Should the company accept the additional business at this price? Discuss.

If for the next year, InstantTesting is again forecasting 1200 test, and the same insurance company is interested in sending 500 additional cases, and is willing to pay a price of $240 per test, should instantTesting accept the offer? Discuss.