Question
Laurie Vaden is a physician with her own practice. She has developed contracts with several large employers to perform routine exams, fitness-for-duty exams and initial
Laurie Vaden is a physician with her own practice. She has developed contracts with several large employers to perform routine exams, fitness-for-duty exams and initial screening of on-the-job injuries. She provides 100 exams per month, charging $100 per exam. Under this contract, she estimates her avoidable fixed costs attributable to the exams is $1,000 per month, and she pays a lab an average of $15 per exam. She has decided she needs to increase profit, so she is considering raising her fee to $125, even though there may be a 10% loss in the number of exams she does per month. Determine the current and predicted: revenues, variable costs, total contribution margin and product margin. What do you recommend she do?
- 1) Current Revenue:
- 2) Current Variable costs:
- 3) Current total contribution margin:
- 4) Current product margin:
- 5) Predicted Revenue:
- 6) Predicted variable costs:
- 7) Predicted total contribution margin:
- 8) Predicted product margin:
- 9) Recommendation? Enter RAISE or NO CHANGE as your answer.
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