Question
The audiology department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as
The audiology department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows:
Service | Variable Cost per Service | Annual Direct Fixed Costs | Annual Number of Visits |
Basic examination | $4.7 | $53061 | 2674 |
Advanced examination | 7.2 | 28550 | 1602 |
Therapy session | 10.9 | 44532 | 551 |
Assume that the audiology department is allocated $100000 in total overhead by the clinic, and the department director has allocated $51122 of this amount to the three services listed above. What is the fee schedule for the basic examination service, assuming that the goal is to cover variable and direct fixed costs as well as overhead costs? (To answer this question, assume that the allocation of overhead costs to each service is made on the basis of number of visits.)
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