Assume that managers at good hospital are setting the price on a new outpatient service.
Here are relevant data estimates:
Variable cost per visit $48
Annual direct fixed costs $1,750,000
Annual overhead allocation $395,000
Expected annual utilization 35,000 visits
A. 1. What per visit price must be set for the service to breakeven? 2. To earn an annual profit of $275,000?
B. Repeat part A but assume that the variable cost per visit is $50.