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Assume that the managers at Lehman Hospital are setting the price on a new outpatient service....

Assume that the managers at Lehman Hospital are setting the price on a new outpatient service. Here are the relevant data estimates for:

Fixed Costs = $500,000

Variable cost per visit = $35

Expected annual utilization = 12,500 visits

           

  1. What per visit price must be set for the service to break even?
  2. If Lehman Hospital decides to charge $100 per visit, what number of visits will be required for the service to obtain a profit of $250,000
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