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Financial management of health care organizations

Drive in Surgery is studying the possibility of opening a satellite center in the far west part of the metro area. At a minimum, DISC needs a $190,000 profit at the satellite center to keep to their financing. Based on DISC's experience at its present surgi-center, the new center would require about $115,950 in fixed costs. DISC believes variable costs will be similar to the current center's total variable costs of $600,300 at 920 procedures. Normal net revenue per procedure is $1260. Complete the information and various scenarios below.

(a) What is DISC revenue per procedure?
(b) What is DISC variable cost per procedure?
(c) What is its fixed cost?
(d) What is its profit to meet financing requirement?
(e) what is its procedure breakeven point (no profit)?
(f) procedures required for needed profit level?
(g) Breakeven net revenue per procedure @ half of existing center's volume which is 920 procedures?

(h) The amount fixed costs (profit at $190,000) need to be reduced, if net revenue cannot be increased and procedures will be at 50% of existing center's volume?

(i) The amount by which variable cost per procedure can be increased and still make the $190,000 profit, if procedures will be 60% of existing center's volume?

Solution Summary

Tutorial is 295 words with clear computations and on-point responses.