Determine the current and predicted revenues

Assignment Help Financial Management

Reference no: EM131959245

Janet Gilbert is director of a lab. She has some extra capacity and has contracted with some small neighboring hospitals to run some of their lab tests.

She has recently had a study conducted and has determined that her costs for these contracts are $50,000, of which $7,000 is the variable cost of supplies. The rest is non-avoidable fixed cost. She currently charges an average of $30 per test.

She is thinking of lowering her price by 20 percent in hopes of raising her current volume of 20,000 tests by 25 percent. If she does so, she expects her variable cost per test will go up by 5 percent.

Determine the current and predicted (a) revenues, (b) variable costs, and (c) total contribution margin and product margin.

What should she be recommended to do? Why?

Reference no: EM131959245

Questions Cloud

Gross sales to the markets organizers : How many pies will she need to sell to cover her fixed costs and realize a $10,000 profit? (input the number only and round up to the nearest pie)

Calculate the price of the bond and create an amortization : The bonds are dated January 1, 2012, mature January 1, 2015, and pay interest on June 30 and December 31 of each year.

Prepare the journal entry to record intrest on december : On January 1, 2016, Bishop Company issued 10% bonds dated January 1, 2016 with a ace amount of 1,000,000. The bonds mature in 2020 (5 years).

What is the expected total costs for the worst case scenario : Orange believes that any of its forecasts including fixed costs could be high or low by as much as 6%. What is the expected total costs for the worst case

Determine the current and predicted revenues : Janet Gilbert is director of a lab. She has some extra capacity and has contracted with some small neighboring hospitals to run some of their lab tests.

Explain the design of the adjacentrooms rectangular array : In your own words, explain the design of the adjacentRooms rectangular array. List each method header and briefly describe what that method does.

By how much has the dollar appreciated or depreciated : On January 1, 2007, the Mexican Peso/U.S. exchange rate was Ps 10.6250 = $1. By January 1, 2017, the exchange rate stood at Ps 19.1476 = $1.

How much will you pay in? interest : How much will you pay in? interest, and how much will you pay in? principal, during the first? month, second? month, and first? year?

What are their total liabilities : If their revolving credit and unpaid bills total $2,200, what are their total liabilities?

User Account

All Pages