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The controller of the Nashville Community Hospital is evaluating ways to increase revenue. The financial objective of the hospital is to operate above its breakeven point. The hospital currently refers approximately 2,500 patients each year to a nearby laboratory for a common blood test. The lab charges $30 for each test. The equipment needed to perform the test can be least for $34,250 per year and technician would have to be hired at $14,000 annually. Other fixed annual cost for the test are expected to be $8,000. The controller estimated variable costs (e.g supplies) will be $5 for each test.
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Question 1. If the hospital charges $30 per test, how many tests must be performed each year to breakeven on the services?
Question 2. If the hospital can perform 2,500 tests per year, how much should be charged for each test to break even?
Question 3. Assume that the hospital wants to offset operating losses of $12,500 from another department with profit from the blood tests. If $30 per test is charged, how many tests must be performed annually?
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