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1. Med-First is a medical facility that offers outpatient medical services. The facility is considering offering an additional service, mammography

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1. Med-First is a medical facility that offers outpatient medical services. The facility is considering offering an additional service, mammography screening tests, on-site. The facility estimates the annual ±xed cost of the equipment and skills necessary for the service to be \$120,000. Variable costs for each patient processed are estimated at \$35 per patient. If the clinic plans to charge \$55 for each screening test, how many patients must it process a year in order to break even? 2. George Fine, owner of Fine Manufacturing, is considering the introduction of a new product line. George has considered factors such as costs of raw materials, new equipment, and requirements of a new production process. He estimates that the variable costs of each unit produced would be \$8 and ±xed costs would be \$70,000. (a) If the selling price is set at \$20 each, how many units have to be produced and sold for Fine Manufacturing to break even? Use both graphical and algebraic approaches. (b) If the selling price of the product is set at \$18 per unit, Fine Manufacturing expects to sell 15,000 units. What would be the total contribution to pro±t from this product at this price? (c) Fine Manufacturing estimates that if it offers the product at the original target price of \$20 per unit, the company will sell about 12,000 units. Which pricing strategy—\$18 per unit or \$20 per unit—will yield a higher contribution to pro±t? (d) Identify additional factors that George Fine should consider in deciding whether to produce and sell the new product.
3. Easy-Tech Software Corporation is evaluating the production of a new software product to compete with the popular word processing software currently available. Annual Fxed costs of producing the item are estimated at \$150,000, and the variable cost is \$10 per unit. The current selling price of the item is \$35 per unit, and the annual sales volume is estimated at 50,000 units. (a) Easy-Tech is considering adding new equipment that would improve software quality. The negative aspect of this new equipment would be an increase in both Fxed and variable costs. Annual Fxed costs would increase by \$50,000 and variable costs by \$3. However, marketing expects the better-quality product to increase demand to 70,000 units. Should Easy-Tech purchase this new equipment and keep the price of their product the same? Explain your reasoning. (b) Another option being considered by Easy-Tech is the increase in the selling price to \$40 per unit to offset the additional equipment costs. However, this increase would result in a decrease in demand to 40,000 units. Should Easy-Tech increase its selling price if it purchases the new equipment? Explain your reasoning. 4. Mop and Broom Manufacturing is evaluating whether to produce a new type of mop. The company is considering the operations requirements for the mop as well as the market potential. Estimates of Fxed costs per year are \$40,000, and the variable cost for each mop produced is \$20. (a) If the company sells the product at a price of \$25, how many units of product have to be sold in order to break even? Use both the algebraic and graphical approaches.
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1. Med-First is a medical facility that offers outpatient medical services. The
facility is considering offering an additional service, mammography screening
tests, on-site. The facility...

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