You can charge $10,000 for a new service for which annual demand is anticipated to be 5,000 units. Your business is able to handle 2,000 procedures per year. The business will be covered by five payers: program 1 will cover 85% of charges for 25% of the patients; program 2 will pay 85% of charges for 20% of the patients, program 3 will pay 75% of charges for 10% of the patients, program 4 will pay 85% of charges for 10% of the patients, and program 5 will pay 95% of charges for 35% of the patients. The new service has annual fixed costs of $10,000,000. Variable cost per unit of service is $950. Use breakeven analysis to determine if this program opportunity should be pursued. Explain your reasoning.

Answer rating: 100% (QA)

Answer To determine if the new service opportunity should be pursued we can use breakeven analysis B... View the full answer