The orthopods & the radiologist Suppose that there are ten orthopaedic surgeons that have their private consultation rooms in a shared facility. Currently each earns $20,000 per month and pays $10,000 per month towards the operating expenses of the joint facility. A world renowned radiologist has just moved to town and is deliberating over where to set-up his practice. If he goes it alone he will earn $300,000 per month and will have to incur a monthly operating cost of $100,000. On the other hand, the orthopods have calculated that if they were to accommodate him in their existing facility, their total operating costs would increase from $100,000 to $120,000 per month, but each individual practice will increase its revenues from $20,000 to $50,000 per month. Moreover, they have convinced the radiologist, that his practice will also increase revenues from patients by $20,000 per month. Assuming that the 10 orthopods have chosen a representative to negotiate with the radiologist (so that representative thinks about the total profits of the orthopods), what cost sharing scheme will the representative and the radiologist probably agree on? Group of answer choices The orthopods pay the radiologist $15,000 per month, as well as the operating expenses. The orthopods pay the radiologist $80,000 per month, as well as the operating expenses. The radiologist pays $10,000 per month for the operating expenses, the orthopods pay $110,000 per month for the operating expenses. The radiologist pays $60,000 per month for the operating expenses, as do the orthopods. The radiologist pays the orthopods $25,000 per month, and the operating expenses are shared evenly across the eleven individuals. The orthopods pay all the operating expenses, the radiologist pays nothing.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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The orthopods & the radiologist

Suppose that there are ten orthopaedic surgeons that have their private consultation rooms in a shared facility. Currently each earns $20,000 per month and pays $10,000 per month towards the operating expenses of the joint facility.

A world renowned radiologist has just moved to town and is deliberating over where to set-up his practice. If he goes it alone he will earn $300,000 per month and will have to incur a monthly operating cost of $100,000.

On the other hand, the orthopods have calculated that if they were to accommodate him in their existing facility, their total operating costs would increase from $100,000 to $120,000 per month, but each individual practice will increase its revenues from $20,000 to $50,000 per month. Moreover, they have convinced the radiologist, that his practice will also increase revenues from patients by $20,000 per month.

Assuming that the 10 orthopods have chosen a representative to negotiate with the radiologist (so that representative thinks about the total profits of the orthopods), what cost sharing scheme will the representative and the radiologist probably agree on?

Group of answer choices

The orthopods pay the radiologist $15,000 per month, as well as the operating expenses.

The orthopods pay the radiologist $80,000 per month, as well as the operating expenses.

The radiologist pays $10,000 per month for the operating expenses, the orthopods pay $110,000 per month for the operating expenses.

The radiologist pays $60,000 per month for the operating expenses, as do the orthopods.

The radiologist pays the orthopods $25,000 per month, and the operating expenses are shared evenly across the eleven individuals.

The orthopods pay all the operating expenses, the radiologist pays nothing.

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