Big Sky Dermatology Specialist are setting the price on a new office location. Here are the relevant data estimates: Variable Cost Per Visit $8.00 Annual Direct fixed Cost $650,000 Annual overhead allocation $65,000 Expected annual utilization 10,000 visits ⦁ What per visit price must be set for the service to break-even? To earn an annual profit of $100,000? Insert your response here. Per visit price= Variable cost + fixed cost + annual overhead / total # number of visits (variable cost *volume) Per visit price = 8*10,000 + 650,000 + 65,000/ 10,000 = 80,000 + 650,000 + 65,000/ 10,000 = 795,000/10,000 Per visit price = 79.5 Per visit price = total cost incurred by + desired profit/ total number of visits =79.5*10,000 + 100,000 /10,000 = 895,000/10,000 = 89.5 To earn an annual profit of $100,000 the per visit price must be set at $89.5 ⦁ Repeat Part a. but assume that the variable cost per visit is $12. Insert your response here. Per visit price = 12*10,0000 + 650,000 + 65,000/ 10,000 =120,000 + 650,000 + 65,000/ 10,000 = 835,000/10,000 Per visit price = 83.5 Per visit price = total cost incurred by + desired profit/ total number of visits =83.5*10,000 + 100,000 /10,000 = 935,000/10,000 = 93.5 To earn an annual profit of $100,000 the per visit price must be set at $93.5 ⦁ Return to the data given in the problem. Again repeat Part a, but assume that direct fixed costs are $1,000,000. Insert your response here. Per visit price = 8*10,000 + 1,00,000 + 65,000/ 10,000 = 80,000 + 1,000,000 + 65,000/ 10,000 = 1,145,000/10,000 Per visit price = 114.5 Per visit price = total cost incurred by + desired profit/ total number of visits =80,000 + 1,000,000 + 100,000 /10,000 = 1,1805,000/10,000 = 118 Per visit price must be set for the service to break-even $ 114.50 Per visit price must be set for the service to achieve target profit $ 118.00 ⦁ Repeat Part a assuming both a $10. Variable cost and $1,000,000 in direct fixed costs. Insert your response here. Per visit price = 10*10,000 + 1,00,000 + 65,000/ 10,000 = 100,000 + 1,00,000 + 65,000/ 10,000 = 1,165,000/10,000 Per visit price = 116.5 Per visit price = total cost incurred by + desired profit/ total number of visits =1,165,000 + 100,000 /10,000 = 1,265,000/10,000 = 126.5 Per visit price must be set for the service to break-even $ $116.50 Per visit price must be set for the service to achieve target profit $ 126.50
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⦁ Big Sky Dermatology Specialist are setting the price on a new office location. Here are the relevant data estimates:
Variable Cost Per Visit $8.00
Annual Direct fixed Cost $650,000
Annual
Expected annual utilization 10,000 visits
⦁ What per visit price must be set for the service to break-even? To earn an annual profit of $100,000?
Insert your response here.
Per visit price= Variable cost + fixed cost + annual overhead / total # number of visits
(variable cost *volume)
Per visit price = 8*10,000 + 650,000 + 65,000/ 10,000
= 80,000 + 650,000 + 65,000/ 10,000
= 795,000/10,000
Per visit price = 79.5
Per visit price = total cost incurred by + desired profit/ total number of visits
=79.5*10,000 + 100,000 /10,000
= 895,000/10,000
= 89.5
To earn an annual profit of $100,000 the per visit price must be set at $89.5
⦁ Repeat Part a. but assume that the variable cost per visit is $12.
Insert your response here.
Per visit price = 12*10,0000 + 650,000 + 65,000/ 10,000
=120,000 + 650,000 + 65,000/ 10,000
= 835,000/10,000
Per visit price = 83.5
Per visit price = total cost incurred by + desired profit/ total number of visits
=83.5*10,000 + 100,000 /10,000
= 935,000/10,000
= 93.5
To earn an annual profit of $100,000 the per visit price must be set at $93.5
⦁ Return to the data given in the problem. Again repeat Part a, but assume that direct fixed costs are $1,000,000.
Insert your response here.
Per visit price = 8*10,000 + 1,00,000 + 65,000/ 10,000
= 80,000 + 1,000,000 + 65,000/ 10,000
= 1,145,000/10,000
Per visit price = 114.5
Per visit price = total cost incurred by + desired profit/ total number of visits
=80,000 + 1,000,000 + 100,000 /10,000
= 1,1805,000/10,000
= 118
Per visit price must be set for the service to break-even $ 114.50
Per visit price must be set for the service to achieve target profit $ 118.00
⦁ Repeat Part a assuming both a $10. Variable cost and $1,000,000 in direct fixed costs.
Insert your response here.
Per visit price = 10*10,000 + 1,00,000 + 65,000/ 10,000
= 100,000 + 1,00,000 + 65,000/ 10,000
= 1,165,000/10,000
Per visit price = 116.5
Per visit price = total cost incurred by + desired profit/ total number of visits
=1,165,000 + 100,000 /10,000
= 1,265,000/10,000
= 126.5
Per visit price must be set for the service to break-even $ $116.50
Per visit price must be set for the service to achieve target profit $ 126.50
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