Dr.Charles Hunter,MD,performs a certain outpatient procedure for $1,000.His fixed costs are $20,000,while his variable costs are $500 per procedure.Dr.Hunter currently plans to perform 200 procedures this month.What is the breakeven point for the month assuming that Dr.Hunter plans to perform the procedure 200 times?
A) 40 times
B) 30 times
C) 20 times
D) 10 times

Question

Quizplus · Accepted Answer

The breakeven point is calculated by dividing the fixed costs by the contribution margin per procedure. The contribution margin is the price per procedure minus the variable cost per procedure ($1,000 - $500 = $500). The breakeven point is $20,000 / $500 = 40 procedures.

DrCharles Hunter,MD,performs a Certain Outpatient Procedure for $1,000