Assume that managers of HBO Hospital are setting the price on a new outpatient service. Here are relevant data estimates:
Variable cost per visit $27.00
Annual Direct Fixed Costs $750,000
Annual Overhead Allocation $125,000
Expected Annual Utilization 45,000 visits
a. 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 $650,000.
d. Repeat Part a assuming both a $30 variable cost and $650,000 in direct fixed costs.