Jamestown Clinic had the following fixed and variable costs:
What are the fixed, variable, total, and average costs per patient for volumes of 100, 500, 1,500, 2,500, and 3,000?
Draw a graph of the average cost per patient. Plot cost on the vertical axis and the number of patients on the horizontal axis.
An outside organization, such as a health maintenance organization, offers to send Jamestown 500 patients per year but offers to pay only $300 for each one. Should Jamestown agree to this arrangement? It currently has 2,500 patients per year and can easily handle 3,000.