SKF Primary Care Clinic is deciding whether to purchase MRI equipment that would

Question

SKF Primary Care Clinic is deciding whether to purchase MRI equipment that would enable it to perform MRI imaging services in-house rather than sending its patients to its competitor's hospital three miles away. From a financial position, if SKF were to make its decision without using net present value analysis, the clinic would need to know (or at least reasonably estimate) which of the following information?

A)Unavoidable fixed cost, volume, variable cost, and indirect costs

B)Variable costs, volume, avoidable fixed cost, and total revenue

C)Total unit cost, indirect costs, profit, and volume

D)Revenue per unit, indirect costs, volume, and total revenue

EAvoidable fixed costs, revenue per unit, volume, and contribution margin

Explanation / Answer

E. Avoidable fixed costs, revenue per unit, volume, and contribution margin

Reason:

Contribution margin will help calculate variable costs. Revenue per unit is important.

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