Question: A clinic has the fixed and variable costs shown below. A health maintenance organization offers to send 500 patients per year but only offers to

A clinic has the fixed and variable costs shown below. A health maintenance organization offers to send 500 patients per year but only offers to pay $300 for each one. Should the clinic agree to this arrangement? It currently has 2,500 patients per year and can easily handle 3,000.

Variable Cost Per Patient Fixed Costs Per Year

Personnel $150 Rent $100,000

Supplies 20 Administrative 120,000

Laundry 30 Other 80,000

Other 50

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