The hospital is opening a new dermatological and orthopedic department. And the CFO needs to know...

  

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The hospital is opening a new dermatological and orthopedic department. And the CFO needs to know how much to charge for those services. Use an Excel spreadsheet to determine the breakeven and profit points. Since the CEO would like to learn more about calculating breakeven points, please show your work. 1. Assume that the managers of the hospital are setting the price on a new dermatology service. Here are the relevant data estimates: Varible cost per visit Annual direct fixed cost $ 7.00 $350,000.00 Annual overhead allocation $ 49,000.00 Expected annual utilization 9100 a. What per-visit price must be set for the service to break even? To earn an annual profit of $100,000. b. Repeat part A but assume that the variable cost per visit is $10. c. Return to the data given in the problem. Again, repeat part A, but assume that direct fixed costs are $1,000,000. 2. The Orthopedic Department offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: Service Variable Cost Annual Direct per Service Fixed Costs Annual Visits Basic examination $ 5.00 $ 60,000.00 5000 Advance examination $ 7.00 $ 35,000.00 3500 Therapy session $ 10.00 $ 50,000.00 1500 a. What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs? b. Assume that the Orthopedic Department is allocated $100,000 in total overhead by the clinic, and the department director has allocated $50,000 of this amount to the three services listed earlier. What is the fee schedule, assuming that these overhead costs must be covered in addition to the variable and direct fixed costs? (To answer this question, assume that the allocation of the $50,000 in overhead costs to each of the three services is made on the basis of the number of visits.) c. Assume that these three services must make a combined profit of $25,000. Now, what is the fee schedule? (To answer this question, assume that the profit requirement is allocated to each of the three services in the same way as overhead costs.) The hospital is opening a new dermatological and orthopedic department. And the CFO needs to know how much to charge for those services. Use an Excel spreadsheet to determine the breakeven and profit points. Since the CEO would like to learn more about calculating breakeven points, please show your work. 1. Assume that the managers of the hospital are setting the price on a new dermatology service. Here are the relevant data estimates: Varible cost per visit Annual direct fixed cost $ 7.00 $350,000.00 Annual overhead allocation $ 49,000.00 Expected annual utilization 9100 a. What per-visit price must be set for the service to break even? To earn an annual profit of $100,000. b. Repeat part A but assume that the variable cost per visit is $10. c. Return to the data given in the problem. Again, repeat part A, but assume that direct fixed costs are $1,000,000. 2. The Orthopedic Department offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows: Service Variable Cost Annual Direct per Service Fixed Costs Annual Visits Basic examination $ 5.00 $ 60,000.00 5000 Advance examination $ 7.00 $ 35,000.00 3500 Therapy session $ 10.00 $ 50,000.00 1500 a. What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs? b. Assume that the Orthopedic Department is allocated $100,000 in total overhead by the clinic, and the department director has allocated $50,000 of this amount to the three services listed earlier. What is the fee schedule, assuming that these overhead costs must be covered in addition to the variable and direct fixed costs? (To answer this question, assume that the allocation of the $50,000 in overhead costs to each of the three services is made on the basis of the number of visits.) c. Assume that these three services must make a combined profit of $25,000. Now, what is the fee schedule? (To answer this question, assume that the profit requirement is allocated to each of the three services in the same way as overhead costs.)