Profit, charges, and break-even without and with overhead. A number of years ago

Question

Profit, charges, and break-even without and with overhead. A number of years ago, at the request of its employees, Jack Winslow and Company converted one of its small rooms to house a small pharmacy for its employees in which they can buy a few popular prepackaged drugs. JWC only wants to break even on this service. Total cost of operating the pharmacy per year is $24,000: $1,000 a month for the contractor who operates the pharmacy and the remainder in drug costs. JWC charged $25 a month to each of 500 employees who participated last year.

Explanation / Answer

a)total money earned=$25*500=$12500 total spent=$24000 So, the loss =$ 24000-$12500 =$11500 b)For break even JWC should charge the amount that is equl to = 24000/500 =$48 c)total overhead =$100*12=$1200 total cost =$25200 So, total amount charged =$25200/500 =$50.4 d)total amount of drugs taking in to inflation effect= 1.1*12000 =$13200 So, total amount =$26400 amount charged per employee =$26400/500 =$52.8

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