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Appolo Healthcare Solutions provides preventive health check-up packages for men and women over 40 years...

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Accounting

Appolo Healthcare Solutions provides preventive health check-up packages for men and women over 40 years of age and charges $12,500 per package on an average. The average variable costs per package are as follows: Doctors fees $1,000 Pathological tests and clinical examinations 3,500 Medicines 2,800 Refreshments and health drinks 300 Costs of miscellaneous services 800 Total $8,400 Annual fixed costs total $900,000. Required: i. Calculate the number of health check-up packages that must be sold to break even. ii. Calculate the revenue needed to earn a target operating income of $270,000. iii. If fixed costs increase by $19,000, what decrease in variable cost per person must be achieved to maintain the breakeven point calculated in requirement 1? iv. The managing director at Appolo proposes to increase the average price of the packages by $900 to decrease the breakeven point in units. Using information in the original problem, calculate the new breakeven point in units. What factors should the managing director consider before deciding to increase the price of the package?

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