Question - Assume that the managers of Dominion Healthcare facility are setting the price on a new outpatient service. Here are the relevant data estimates:
Annual direct fixed costs $500,000
Variable cost per visit $5.00
Annual overhead allocation $50,000
Expected annual utilization 10,000
a. What per-visit price must be set for the service to breakeven? To earn an annual profit of $100,000?
b. Repeat Part a, but assume that the variable cost per visit is $10,
c. Return to the data given in the problem. Again repeat Part a, but assume that the direct fixed costs are $1,000,000.