Question

Đ What is the clinic's underlying cost structure ? 5,500 visits? At 10,500 visits? . What is the average cost per visit at 7,ooo Your director has commissoned you to put together Projects for a new new ambulatory urgent care center. Your financial projections for the first year of operations are as follows: utilities 3500 2 What number visits 10,ooo Wages and benefit 420,000 Medical Supplies 75,000 Rent administrative Supplies 11,000 Depreciation 30,000 Assume that all cost are fixed except supplies cost, which are variable 8,000 are the clinic's expected total cost? What are the clinic's exstimated total cost at 10,000 and 12,000 visits?

Answer 1

1-
variable cost per visit	(medical supplies+adminstrative supplies)/no of visits	(75000+11000)/10000	8.6
total fixed cost	wages and benefits+rent+Depreciation+utilities	(420000+8000+30000+3500)	461500
2-
clinic expected total cost at the level of 10000 visits
total variable cost	10000*8.6	86000
total fixed cost		461500
total expected cost at the level of 10000 visits		547500
C-
estimated total cost at 5500 visit
total variable cost	5000*8.6	43000
total fixed cost		461500
total expected cost at the level of 5000 visits		504500
estimated total cost at 10500 visit
total variable cost	10500*8.6	90300
total fixed cost		461500
total expected cost at the level of 10500 visits		551800
D-
estimated total cost at 7000 visit
total variable cost	7000*8.6	60200
total fixed cost		461500
total expected cost at the level of 7000 visits		521700
Average cost per unit at 7000 visits = total expected cost/no. of visits	521700/7000	74.53
estimated total cost at 10000 visit
total variable cost	10000*8.6	86000
total fixed cost		461500
total expected cost at the level of 7000 visits		547500
Average cost per unit at 10000 visits = total expected cost/no. of visits	547500/10000	54.75
estimated total cost at 12000 visit
total variable cost	12000*8.6	103200
total fixed cost		461500
total expected cost at the level of 7000 visits		564700
Average cost per unit at 12000 visits = total expected cost/no. of visits	564700/12000	47.06