Should the clinic agree to the arrangement

Reference no: EM131956057

Question: A clinic has the fixed and variable costs shown below. A health maintenance organization offers to send 500 patients per year but only offers to pay $300 for each one. Should the clinic agree to this arrangement? It currently has 2,500 patients per year and can easily handle 3,000.

Variable Cost Per Patient Fixed Costs Per Year

Personnel $150

Rent $100,000

Supplies 20

Administrative 120,000

Laundry 30

Other 80,000

Other 50

Reference no: EM131956057

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