Question

I need help in this questions. Please clearly type so i can understand everything. Please make everything clear and correct

An orthopedic outpatient center has a procedure whose gross charge is $2,400 of which $1,100 is collected. The variable cost per procedure is $600. The monthly fixed cost assigned to doing this procedure is $63,000. The center wants to generate a $12,000 profit each month in doing this procedure. How many procedures per month, rounding up to the next highest whole number if necessary, would it need to do? (Show your work as partial credit will be given). Using the concepts from a traditional breakeven analysis graph, describe using the general terms we used in class, four (4) ways in which the surgery center can increase its profit from doing this procedure.

Answer 1

Answer:1)

Expected Profit(EP):$12,000

Variable Cost(VC):$600

Fixed Cost(FC)::$63,000

Charge per unit(R) :$1,100

R-FC-VC=EP

$1,100Q-$63,000-$600Q=$12,000

$500Q-$63000=$12,000

$500Q=$12000+$63,000

$500Q=$75,000

Q=$75,000/500=150.

150 procedures per month to generate $12,000 profit per month.

Answer:2)

Fixed cost is a cost that does not change no matter whether the surgery center breaks even or not. Surgery center can increase its profit by the variable cost that is directly correlated with the amount of procedures they do. Charge per unit will produce a surplus when the price is set correctly.