Super clinics offers one service that has the following annual cost and utilization estimates: variable cost per visit $10; annual direct fixed costs $50,000; allocation of overhead costs $20,000; expected utilization 1,000 visits. what price per visit must be set if the clinic wants to make an annual profit of $10,000 on the service?

Price to be charged per visit = $90 per visit

Explanation:

We need to calculate the price per visit.

Desired profit = $10,000

Total costs for 1,000 visits = Variable Costs + Fixed Costs + Allocated Costs

Variable cost = $10 X 1,000 visits = $10,000

Fixed costs = $50,000

Allocated Overhead costs = $20,000

Total costs = $10,000 + $50,000 + $20,000 = $80,000

Total amount to be recovered = Total costs + desired profit

= $80,000 + $10,000 = $90,000

Total no of visits = 1,000

Price to be charged per visit = $90,000/1,000 = $90 per visit

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month 1 start amount =$3287.90 interest=(3287.90x0.0145/12)3.97 total to pay=$3291.81 paid =$1200 balance =$2,091.87

month 2 starting amount= $2,091.87 interest =$25.28 total to pay =$2117.15 paid =$1200 balance $917.15

month 3 starting amount =$917.15 interest =$11.08 total to pay =$928.23 paid =$928.23 balance =$0 total to pay 1200+1200+928.23 = $3328.23 it will take 3 months to pay a total of $3328.23