- The Audiology Department at Randall Clinic offers many services to the clinic\

Question

-The Audiology Department at Randall Clinic offers many services to the clinic's patients.The three most common, along with cost and utilization data, are as follows:

Sevice-           Variable Cost per serivce - Annual Direct costs- Annual Number of visits

Basic examination    $5                                $50,000 3,000
Advanced examination    7                                  30,000                                  1,500
Therapy session             10                                40,000    500

a. What is the fee schedule for these services, assuming that the goal is to cover only
variable and direct fixed costs?

b. Assume that the Audiology Department is allocated $100,000 in total overhead by
the clinic, and the department director has allocated $50,000 of this amount to the
three services listed above.What is the fee schedule assuming that these overhead
costs must be covered? (To answer this question, assume that the allocation of
overhead costs to each service is made on the basis of number of visits.)

Explanation / Answer

Hi,

Please find the answer as follows;

Part A:

Part B:

Thanks.

Service Type Total Variable Cost Annual Direct
Costs Fee Schedule Fee Schedule Per Service
Basic examination 15000 50000 65000 21.67 Advanced examination 10500 30000 40500 27.00 Therapy session 5000 40000 45000 90.00

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