Determine the best sales mix

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Reference no: EM13211519

Sales Mix DecisionDr. Massy, who specializes in internal medicine, wants to analyze his sales mix to find out how the time of hisphysician assistant, Consuela Ortiz, can be used to generate the highest operating income.Ortiz sees patients in Dr.Massy's office, consults with patients over the telephone, and conducts one dailyweight-loss support group attended by up to 50 patients.Statistics for the three services are as follows:Office VisitsPhone CallsWeight-Loss SupportGroupMaximum numberof patient billings per day204050Hours per billing.25.101.0Billing rate$50$25$10Variable costs$25$12$5Ortiz works seven hours a day.Required

1. Determine the best sales mix. Rank the services offered in order of their profitability.

2. Based on the ranking inI,how much time should Ortiz spend on each service in a day? (Hint:Remember to consider the maximum number of patient billings per day.) What would be the daily totalcontribution margingenerated by Ortiz?

3. Dr. Massy believes the ranking is incorrect. He knows that the daily 60-minute meeting of the weight-loss support group has 50 patients and should continue to be offered.If the new ranking for theservices is (1)weight-loss support group, (2) phone calls, and (3) office visits, how much time shouldOrtiz spend on each service in a day?

What would be the total contribution margin generated by Ortiz,assuming the weight-loss support group has the maximum number of patient billings?

4.Manager Insight:Which ranking would yourecommend? What additional amount of total contributionmargin would be generated if your recommendation is accepted?

Reference no: EM13211519

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