Optometry Practice

You are evaluating ways to expand an optometry practice and its earnings capacity. Optometrists perform

eye exams, prescribe corrective lenses, and sell corrective lenses.

One way to expand the business is to hire an additional optometrist. The annual cost of one optometrist,

which includes salary, benefits and payroll taxes, is $$63,000.$

You estimate that this individual can conduct two exams per hour at an average price to the patient of $$45$

per hour. The optometrist will work $40$ hour weeks for $48$ weeks per year. We should not assume that

the optometrist will be able to charge for every hour worked.

From your experience, you know that each eye exam drives additional product sales. Each exam will either

lead to an eyeglass sale $($contribution margin of $$90)$ or a contact lens sale $($contribution margin of $$65).$ Neither includes

the $$45$ eye exam fee. On average, $60\%$ of exams lead to eyeglass sales; $20\%$ lead to contact lenses; $20\%$ have no additional sales.

Annual

Besides the salary, there are the following costs: Office Occupancy $$1,200$

Leased Equipment $330$

Office Staff $23,000$

How many examinations must be performed for the new optometrist to break$-$even?