Final answer:
The acquisition cost for cost-per-procedure contracts is computed by dividing the total cost by the total number of procedures. This determines the average cost per procedure, which helps a firm assess profitability compared to market prices.
Step-by-step explanation:
When dealing with cost-per-procedure contracts, the acquisition cost is essentially the average cost for each procedure. To compute this, you divide the total cost associated with all procedures by the total number of procedures conducted. This gives you the cost on average for each procedure, which is useful for comparing against the market price to determine profitability. If this per-procedure cost is lower than the price the market will bear, the firm can expect to earn profits.
Option A in the provided question (Total Procedures Divided by Total Cost) does not correctly represent how the acquisition cost is calculated, as it would not yield a cost but rather a procedure-to-cost ratio. Option B (Cost per Procedure Multiplied by Total Procedures) would give you the total cost rather than the average cost per procedure. Option D (Total Cost Added to Cost per Procedure) is simply adding two different measurements together, which does not make sense in this context. Therefore, the correct approach is described by Option C, which is the Total Cost Divided by the Cost per Procedure.