Question

Ten physicians have just completed their residencies in internal medicine and are considering opening a group...

Ten physicians have just completed their residencies in internal medicine and are considering opening a group practice. They estimate the practice would have the following annual cost structure: Annual fixed costs $750,000 Variable cost per visit $ 50 If volume in the first year is estimated to be 10,000 visits, what price per visit must be set if the practice wants to make an annual profit of $150,000?

A. $140

B. $125

C. $75

D. $50

E. $90

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Answer #1

Correct answer--------------(A) $140

Working

Fixed cost to recover $            750,000
Profit needed $            150,000
Variable cost $            500,000
Total sales required $        1,400,000
Divided by ; Units sold 10000
Price to be charged $ 140
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