Assume that the managers of fort winston hospital are setting the price on a new outpatient service. here are the relevant data estimates:

variable cost per visit: $5

annual direct fixed costs: $500,000

annual overhead allocation: $50,000

expected annual utilization: 10,000 visits

a.) what per visit price must be set for the service to break even? to earn an annual profit of $100,000?

b.) repeat part a, but assume that the variable cost per visit is $10.

c.) return to the data given in the problem. again repeat part a, but assume that the direct fixed costs are $1,000,000.

d.) repeat part a assuming both a $10 variable cost and $1,000,000 in direct fixed costs.

(a)

Let per visit price for the service to break even be x

At break even point,

Total contribution = Total fixed cost

10,000(x - 5) = 500,000 + 50,000

10,000x - 50,000 = 550,000

x = $60

To earn desired profit of $100,000

Total contribution = Total fixed cost + desired profit

10,000(x-5) = 500,000 + 50,000 + 100,000

x = $70

(b)  At break even point ,

Total contribution = Total fixed cost

10,000(x-10) = 500,000 + 50,000

10,000x - 100,000 = 550,000

x = $65

To earn desired profit of $100,000

Total contribution = Total fixed cost + desired profit

10,000(x - 10) = 500,000 + 50,000 + 100,000

x = $75

(c)  At break even point ,

Total contribution = Total fixed cost

10,000(x - 5) = 1,000,000 + 50,000

10,000x - 50,000 = 1,050,000

x = $110

To earn desired profit of $100,000

Total contribution = Total fixed cost + desired profit

10,000(x-5) = 1,000,000 + 50,000 + 100,000

x=$120

(d)

Total contribution = Total fixed cost

10,000(x-10) = 1,000,000 + 50,000

10,000x - 100,000 = 1,050,000

x = $115

To earn desired profit of $100,000

Total contribution = Total fixed cost + desired profit

10,000(x-10) = 1,000,000 + 50,000 + 100,000

x = $125

government control and resources

whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

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