The audiology department at Randall Clinic offers many services to the clinic's patients. The three most common, along with cost and utilization data, are as follows:
Service Variable Cost Annual Direct Annual # Visits
per Service Fixed Costs
Basic exam $5 $50,000 3,000
Advanced examination $7 $30,000 1,500
Therapy session $10 $40,000 500
a. What is the fee schedule for these services, assuming that the goal is to cover only variable and direct fixed costs?
b. Assume that the audiology department is allocated $100,000 in
total overhead by the clinic, and the department director has al¬
located $50.000 of this amount to the three services listed above. What is the fee schedule assuming that these overhead costs must be covered? (To answer this question, assume that the allocation of overhead costs to each service is made on the basis of number of visits.)
c. Assume that these services must make a combined profit of $25,000 . Now what is the fee schedule? (To answer this question, assume that the profit requirement is allocated in the same way as overhead costs.) lied Laboratories is combining some of its most common