Problem 1 Question Help Dr Gulakowicz is an orthodontist She

Problem 1

Question Help

Dr. Gulakowicz is an orthodontist. She estimates that adding two new chairs will increase fixed costs by

$ 155,000 including the annual equivalent cost of the capital investment and the salary of one more technician. Each new patient is expected to bring in $3,050

per year in additional revenue, with variable costs estimated at $980 per patient. The two new chairs will allow Dr. Gulakowicz to expand her practice by as many as

215 patients annually. How many patients would have to be added for the new process to break even?The break-even volume is

patients. (Enter your response rounded to the nearest whole number.)

Solution

Break-Even Point Q = Fixed Cost / (Unit Price - Variable Unit Cost)

Variable unit cost=980

Unit price/fees= 3050

Fixed cost =$155000

Q=155000/(3050-980)

Q=74.88= 75

So at 75th patient break even would occur.