Assume that managers of IDC Hospital are setting the price on a new outpatient service. Here are relevant data estimates:
Variable cost per visit $28.50
Annual Direct Fixed Costs $850,000
Annual Overhead Allocation $225,000
Expected Annual Utilization 76,000 visits
A. 1. What per visit price must be set for the service to breakeven?
2. To earn an annual profit of $75,000?
B. Repeat Part a, but assume that the variable cost per visit is $30.
C. Return to the original data given in the problem. Again repeat Part a, but assume that direct fixed costs are $750,000.
D. Repeat Part a assuming both a $30 variable cost and $750,000 in direct fixed costs.