Question

5. Janet Gilbert is director of labs. She has some extra capacity and has contracted with some small neighboring hospitals to run some of their lab tests. She has recently had a study conducted and has determined that her costs of these contracts are $10,000 of which $7,000 are for supplies and items related to each test. She currently charges an average of $10.00 per lab test. She is thinking of lowering her price by 20 percent in hopes of raising her current volume of 10,000 tests by 15 percent.

Answer 1

Check the explanation

Explanation:

Present predicted

Revenue - per test 10000 8000

Variable cost - per test 7000 7000

Contribution – per test 3000 1000

Net income (10,000 test – 11,500 tests) 30,000,000 11,500,000