)- Calculating Break-Even

Price Variable Cost # Contribution Fixed Profit

per visit per visit of visits Margin Costs

$1204,500 $350,000 $65,000

$110 $65 $135,000 $75,000

$455,300 $110,000 $90,000

$135 $75 3,800 $120,000

Section 4 (b) - Calculating Break Even

Amanpreet Kaur, administrator of a diagnostic clinic, needs to determine if he can add an additional staff member to the diagnostic program, which currently has 2

diagnostic machines and 2 technologists.

He has compiled the following information:

Reimbursement per test $75

Equipment cost per machine $800

Equipment maintenance per machine $700

Technologist cost per test $20

Technologist aide per test $4.

Variable cost per test $10

a) What is the patient volume needed to cover fixed and variable costs?

b) What is the patient volume needed if the Centre wants to cover its fixed and variable costs and make a $5,000 profit?

c) If the reimbursement decreases to $55 per test, what is the patient volume needed to cover fixed and variable costs but not profit?

d) If a new technologist aide is hired, what is the patient volume needed at the original reimbursement rate to cover fixed and variable costs but not profit?