Assume that Limitless Labs, Inc., offers three basic drug-testing services for professional athletes. Here are its prices and costs:

Variable costs include the labor costs of the medical technicians at the lab. Fixed costs of $480,000 per year include building and equipment costs and the costs of administration. A basic "unit" is a routine drug test administered. A retest is given if there is concern about the results of the first test, particularly if the test indicates that the athlete has taken drugs that are on the banned drug list. Retests are not done by the laboratory that performed the basic test. A "vital" test is the laboratory's code for a high-profile case. This might be a test of a famous athlete and/or a test that might be challenged in court. The laboratory does extra work and uses expensive expert technicians to ensure the accuracy of vital drug tests. Limitless Labs is subject to a 40 percent tax rate.

Basic Retest Vital Price Variable Cost Units Sold per Unit per Unit per Year 680 210 700 1,025 560 200 4,540 3,070 100