Smith & Smith Medical Clinic provides annual health check-up packages for all ages. The clinic...
80.2K
Verified Solution
Link Copied!
Question
Accounting
Smith & Smith Medical Clinic provides annual health check-up packages for all ages. The clinic charges $14,000 per package on average. The average variable costs per package are $10,500. The annual fixed cost is $980,000.
The following is the estimated income statement of Smith & Smith for 2018:
$
Sales (300 packages)
4,200,000
Variable costs
3,150,000
Contribution margin
1,050,000
Fixed costs
980,000
Net profit
70,000
Required
1. Calculate the break-even point (in number of packages and indollars of sales)
2. Smith & Smith wished to increase the net profit by 150%. What isthe number of package needed to be sold to achieve this target?
3. The clinic is considering spending additional $1,000,000 inadvertising programmes to promote the companys health checkupproducts and it is expected that, with these programmes, salesvolume can be doubled in 2018 with no change in selling price. CanSmith & Smith achieve the target of increased profit in (b) above ifthe clinic goes for the advertising cost?
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
