You can charge $1,200 for a new service for which annual demand is anticipated to be 9,000 units. Your business is able to handle 7,300 procedures per year. The business will be covered by five payers: program 1 will cover 80% of charges for 5% of the patients; program 2 will pay 70% of charges for 15% of the patients, program 3 will pay 60% of charges for 20% of the patients, program 4 will pay 80% of charges for 10% of the patients, and program 5 will pay 90% of charges for 50% of the patients. The new service has annual fixed costs of $5,000,000. Variable cost per unit of service is $354. Use breakeven analysis to determine if this program opportunity should be pursued. Explain your reasoning.

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