Healthcare finance Problem 7.1

Topics: Variable cost, Costs, Fixed cost Pages: 4 (370 words) Published: October 8, 2014
Problem 7.1
Fort Winston Hospital

Variable cost per visit5
Annual direct fixed costs500,000
Annual overhead allocations50,000
Expected annual utiliztion10,000

a.What per-visit must be set for the services to break even?

Variable Cost
Variable cost per visit5
Volume10,000
Total Variable Costs50,000

Fixed Costs
Annual direct costs500,000
Total Fixed Costs500,000
Annual overhead50,000
Total Costs600,000

Volume10,000
Price required to breakeven point 60

Profit of $100k
Total cost 600,000
Profit100,000

Total requirement700,000
divide by volume10,000
Price required to earn $100k70

b.Fort Winston Hospital

Variable cost per visit10
Annual direct fixed costs500,000
Annual overhead allocations50,000
Expected annual utiliztion10,000

What per-visit must be set for the services to break even?

Variable Cost
Variable cost per visit10
Volume10,000
Total Variable Costs100,000

Fixed Costs
Annual direct costs500,000
Total Fixed Costs500,000
Annual overhead50,000
Total Costs650,000

Volume10,000
Price required to breakeven point 65

Profit of $100k
Total cost 650,000
Profit100,000

Total requirement750,000
divide by volume10,000
Price required to earn $100k75

c.Fort Winston Hospital

Variable cost per visit5
Annual direct fixed costs1,000,000
Annual overhead allocations50,000
Expected annual utiliztion10,000

What per-visit must be set for the services to break even?

Variable Cost
Variable cost per visit5
Volume10,000
Total Variable Costs50,000

Fixed Costs
Annual direct costs1,000,000
Total Fixed Costs1,000,000
Annual overhead50,000
Total Costs1,100,000

Volume...
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