Answer:
(a) $91.67
(b) $687,500
(c) $625,000; $750,000
(d) $125; $91.67; $75
Explanation:
(a) Underlying cost structure:
= [($25 × 7,500) + $500,000] ÷ 7,500
= $91.67
(b) Expected total cost:
= $500,000 + ($25 × 7,500)
= $687,500
(c) Estimated total cost at 5,000:
= $500,000 + ($25 × 5,000)
= $625,000
Estimated total cost at 10,000:
= $500,000 + ($25 × 10,000)
= $750,000
(d) Average cost per procedure at 5,000:
= [($25 × 5,000) + $500,000] ÷ 5,000
= $125
Average cost per procedure at 7,500:
= [($25 × 7,500) + $500,000] ÷ 7,500
= $91.67
Average cost per procedure at 10,000:
[($25 × 10,000) + $500,000] ÷ 10,000
= $75
