Pet Energy Therapy Association (PETA) treats peoples pets, and has the following cost structure:

Charge per therapy session $300

Variable cost per therapy session $ 50

Fixed costs $200,000

They expect to perform 1,000 two hour session each year (4/day, 5 days/week, 50 weeks/year).

A. Construct PETAs profit and loss statement.

Revenue ($300 X 1,000) $300,000

Variable Costs ($50 X 1,000) 50,000

Contribution Margin $250,000 Fixed Costs 200,000 Profit (Loss) $ 50,000

B.) How many sessions must PETAs perform to breakeven? Sessions.

To earn a profit of $100,000, how many sessions must they provide this year?

D. If there is one fulltime employee, who spends two hours on each session (and 1 hour for lunch), what would we need to assume about the additional sessions needed to earn $100,000?

2.) Dental Diversity provides three basic service appointments; Cleaning, Check-up, and Full service. Total annual costs average $994,000. An RVU analysis indicates the following:

	Annual Average Appointments	RVUs/appointment
Cleaning	4,000	8
Check-ups	5,000	12
Full service	2,500	20

A. Using RVU methodology, what is the cost for each type of appointment?

B. If the goal is a 20% profit margin, what should be the price for each type of appointment?