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Section 4 (b) - Calculating Break Even Jonathan Lee, administrator of a diagnostic clinic, has been asked by the team members if it is feasible

Section 4 (b) - Calculating Break Even

Jonathan Lee, administrator of a diagnostic clinic, has been asked by the team members if it is feasible to add more staff (technologist aide) to support the practice of the clinic which currently has 2 diagnostic units and 2 technologists

He has compiled the following information:

Reimbursement per test $140

Diagnostic unit lease per month per machine $12,000

Diagnostic unit maintenance per month per machine $9,000

Technologist cost per test $35

Variable cost per test $13

Technologist aide cost per test $20

a) What is the patient volume needed to cover fixed and variable costs?

b) What is the patient volume needed if the Centre wants to cover its fixed and variable costs and make a $3,000 profit?

c) If the reimbursement decreases to $110 per test, what is the patient volume needed to cover fixed and variable costs but not profit?

d) If a new technologist aide is hired, what is the patient volume needed at the original reimbursement rate to cover fixed and variable costs but not profit?

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