Assume the managers of fort Winston hospital are setting the price on a new outpatient service. Here are relevant data estimates:
Variable cost per unit $5
Annual direct fixed costs $500,000
Annual overhead utilization $50,000
Expected annual utilization 10,000
What per visit price must be set for the service to break even? To earn a profit of $100,000
Repeat part A. Assume the variable price per unit is $10
Return to the data given in the problem. Again repeat part a, but assume the direct fixed costs are $100,000
Repeat part A. Assuming both $10 in variable cost, and $1,000,000 is direct fixed costs.