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UnitIVPowerPointHMSample.pptxUnit IV Project Variable and fixed costs for healthcare services in the lab.
The Break-Even Price
= $42.57
Break Even Sales Price = Fixed cost + (Variable cost * Number of Units)
= $436,000 + ($19*18,500)
= $436,000 + 351,500
= The break-even price is $787,500.
$42.57 per test
Fixed Cost for the Lab
Total fixed costs do not change as the volume of the laboratory increases or decreases.
Fixed Cost Include
Equipment
Direct overhead
Indirect overhead costs
Variable Cost for the Lab
Variable costs change with time or with the level of activity
Variable Cost Include
Worker supplies
Patient Care supplies
Diagnostic Cost
Therapeutic Cost
If Break Even Priced Changed
Due to pricing or volume changes
Break Breakeven Sale Price = $749,000.
Break-even price = Fixed cost + (Variable cost*Number of Units)
= $397,500 + ($19 * 18,500)
= $397,500 + $351,500
$38.00 per test
Fixed Cost v/s Variable Cost
Fixed Cost
Variable Cost
Conclusion
Changes in price or change in the volume will affect the profits of the company. If the fixed cost of the company is decreased, then it will decrease the overall cost of the company.
Decrease in the overall cost will increase the net income of the company. The reduction in the overall cost will also reduce the break-even price. Since it is the sum of the fixed operating cost and the variable operating cost.
References
Gapenski, L. C., & Reiter, K. L. (2016). Healthcare finance: An introduction to accounting and financial management (6th ed.). Health Administration Press.
