Assume that the managers of Fort Winston Hospital are setting the price for a new outpatient service. Here are relevant data estimates:

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 direct fixed costs are $1,000,000.

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

Transcribed Image Text:

Variable cost per visit Annual direct fixed costs Annual overhead allocation Expected annual utilization (visits) $ 5.00 $500,000 $ 50,000 10,000