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Accounting: C-V-P analysis and Break-even.

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Proposal A Proposal B Proposal C
Selling Price $99 $129 $99
Variable Costs 55 55 49
Contribution Margin
Contribution Margin Ratio

Fixed Costs $110,000 $110,000 $110,000

Break-even in Units

Break Even in Dollars

1. What are the break-even points in units and dollars under proposal A?

2. How did the increased selling price under proposal B impact the break-even points in units and dollars compared to the break-even points calculated under proposal A?

3. Why did the change in variable cost under proposal C not impact the break-even points in units and dollars as significantly as proposal B did?

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Solution Summary

The problem deals with determining the different profits associated with production volume. It also deals with determining the break-even level with selected information.

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Healthcare finance, cost-volume-profit, management accounting

Consider the CVP graphs below for two providers operating in a fee-for-service environment: see attached file

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Consider the data in the following table for three independent healthcare organizations: (see file)

Total Fixed Total
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a. $2,000 $1,400 ? $2,000 ?
b. ? 1,000 ? 1,600 $2,400
c. 4,000 ? $600 ? 400
Fill in the missing data indicated by question marks.
5.6 Assume that a radiology group practice has the following cost structure:
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