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The administrator of the Carewell Memorial Hospital is considering methods of providing X-ray treatments to patients. The hospital now refers about 200 patients per month to a nearby clinic, and each treatment costs the patients P 850. If the hospital provides the treatment, a machine will be rented for P22,000 per month and technicians will be hired for P36,000 per month. Variable costs are P 100 per treatment.
Required:
Problem 1. The administrator considers charging the same fee as the clinic. By how much will the hospital increase its income if it provides the service?
Problem 2. How much must the hospital charge to break-even on the treatments?
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