Reference no: EM132754017

Question - Scenario: You have been asked to establish a pricing structure for radiology on a per-procedure basis. Current budgetary data is shown below:

Budgeted Procedures 10,000

Budgeted Cost $400,000

Desired Profit $80,000

It is estimated that Medicare patients comprise 40 percent of total radiology volume and will pay on average $38.00 per procedure. Approximately 10 percent of the patients are cost payers. The remaining charge payers are summarized below:

Payer	Volume %	Discount %
Blue Cross	20	4
Unity PPO	15	10
Kaiser	10	10
Self-Pay	5	40
	50%

Required -

1. What rate must be set to generate the required $80,000 in profit?

2. If the forecasted volume increased to 12,000 procedures and budgeted costs increased to $440,000, while all other variables remained constant, what price should be established?