Laurie Vaden is a physician with her own practice.  She has developed contracts with several large employers to perform routine exams, fitness-for-duty exams and initial screening of on-the-job injuries.  She provides 100 exams per month, charging $100 per exam.  Under this contract, she estimates her avoidable fixed costs attributable to the exams is $1,000 per month, and she pays a lab an average of $15 per exam.  She has decided she needs to increase profit, so she is considering raising her fee to $125, even though there may be a 10% loss in the number of exams she does per month.  Determine the current and predicted: revenues, variable costs, total contribution margin and product margin.  What do you recommend she do?  Current Revenue Current Variable costs Current total contribution margin Current product margin Predicted Revenue Predicted variable costs Predicted total contribution margin Predicted product margin Recommendation?  Enter RAISE or NO CHANGE as your answer.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
icon
Related questions
Question
100%

Laurie Vaden is a physician with her own practice.  She has developed contracts with several large employers to perform routine exams, fitness-for-duty exams and initial screening of on-the-job injuries.  She provides 100 exams per month, charging $100 per exam.  Under this contract, she estimates her avoidable fixed costs attributable to the exams is $1,000 per month, and she pays a lab an average of $15 per exam.  She has decided she needs to increase profit, so she is considering raising her fee to $125, even though there may be a 10% loss in the number of exams she does per month.  Determine the current and predicted: revenues, variable costs, total contribution margin and product margin.  What do you recommend she do? 

  1. Current Revenue
  2. Current Variable costs
  3. Current total contribution margin
  4. Current product margin
  5. Predicted Revenue
  6. Predicted variable costs
  7. Predicted total contribution margin
  8. Predicted product margin
  9. Recommendation?  Enter RAISE or NO CHANGE as your answer. 
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps with 2 images

Blurred answer
Knowledge Booster
Characteristics Of Insurance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education