Question: Consider the following data for Midtown Clinic: Service Variable cost Annual direct fixed costs Annual number of visits Basic exam $3 $25,000 5,000 Advanced exam

Consider the following data for Midtown Clinic:

Service	Variable cost	Annual direct fixed costs	Annual number of visits
Basic exam	$3	$25,000	5,000
Advanced exam	$10	$50,000	2,000
Therapy session	$20	$10,000	500

Answer the following for Midtown:

a) What should the price be for a basic exam, assuming that the goal is to cover only variable and direct fixed costs?

b) What should be the price for an advanced exams, assuming that the goal is to cover only variable and direct fixed costs?

c) Now assume that Midtown must allocate $25,000 in overhead to the three services above. Assume that the allocation of overhead costs to each service is made on the basis of number of visits. Calculate the new price for therapy sessions.

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