Question
PLEASE HELP For billing purposes, assume Phoenix Family Medical Clinic classifies its services into one of four major procedures, X1 through X4. A local business
PLEASE HELP
For billing purposes, assume Phoenix Family Medical Clinic classifies its services into one of four major procedures, X1 through X4. A local business has proposed that Phoenix provide health services to its employees and their families at the following set rates per procedure:
X1 | $100 |
X2 | 200 |
X3 | 60 |
X4 | 300 |
Because these rates are significantly below the current rates charged for these services, management has asked for detailed cost information on each procedure. The following information is available for the most recent 12 months.
Number of Procedures | |||||
---|---|---|---|---|---|
Month | Total Cost | X1 | X2 | X3 | X4 |
1 | $17,250 | 30 | 25 | 155 | 19 |
2 | 18,750 | 38 | 30 | 135 | 23 |
3 | 20,250 | 50 | 20 | 105 | 38 |
4 | 14,250 | 20 | 25 | 90 | 25 |
5 | 15,000 | 68 | 15 | 120 | 20 |
6 | 20,250 | 90 | 19 | 158 | 14 |
7 | 19,125 | 20 | 30 | 143 | 28 |
8 | 16,125 | 16 | 30 | 132 | 20 |
9 | 19,500 | 60 | 21 | 93 | 35 |
10 | 16,500 | 20 | 22 | 75 | 35 |
11 | 17,100 | 20 | 18 | 113 | 33 |
12 | 19,875 | 72 | 15 | 150 | 30 |
Required
Evaluate the rates proposed by the local business. Assuming Phoenix has excess capacity and no employees of the local business currently patronize the clinic, what are your recommendations regarding the proposal?
Use negative signs with answers only to indicate a loss. Otherwise do not use negative signs with your answers.
Comparison of Proposed Rates and Estimated Variable Costs | ||||
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Procedure | X1 | X2 | X3 | X4 |
Proposed rate |
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Estimated cost |
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Profit (loss) |
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