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Assume that managers of QVC Hospital are setting the price on a new outpatient service. Here are relevant data estimates:
Variable cost per visit $25.00
Annual Direct Fixed Costs $750,000
Annual Overhead Allocation $275,000
Expected Annual Utilization 20,000 visits
What per visit price must be set for the service to breakeven? To earn an annual profit of $100,000?
Repeat Part a, but assume that the variable cost per visit is $27.
Return to the original data given in the problem. Again repeat Part a, but assume that direct fixed costs are $800,000.
Repeat Part a assuming both a $27 variable cost and $800,000 in direct fixed costs.
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