1. Assume that the managers of Fort Winton Hospitals are setting the price on a new outpatient service. Here are the relevant data estimates:
Variable cost per visit $5.00
Annual direct fixed costs $500,000
Annual overhead allocation $50,000
Expected annual utilization 10,000 visits
a. What per visit price must be set for the service to break even?? To earn an annual profit of $100,000 (2.5 points).
b. Repeat Question a, but assume that the variable cost per visit is $10 (2.5 points).
c. Return to the data given in the problem. Again repeat question1, but assume that direct fixed costs are $1,000,000 (2.5 points).
d. Repeat Question a assuming both a $10 variable cost and 1,000,000 indirect fixed costs.