Our robotic equipment and its maintenance represent afixed cost of $23,320 per month. The cost-effectiveness of robotic-assisted surgery is related to patient volume: Withonly 10 cases, the fixed cost per case is $2,332, and with 40 cases, the fixed cost per case is $583.
Using the example of “From the Front Lines” in Chapter 6 of your text, calculate the break even for the number of procedures.
Thank you for the opportunity to help you with your question!
The break-even analysis is not our favorite analysis because:
It is frequently mistaken for the payback period, the time it takes to recover an investment. There are variations on break even that make some people think we have it wrong. The one we do use is the most common, the most universally accepted, but not the only one possible.
It depends on the concept of fixed costs, a hard idea to swallow. Technically, a break-even analysis defines fixed costs as those costs that would continue even if you went broke. Instead, you may want to use your regular running fixed costs, including payroll and normal expenses. This will give you a better insight on financial realities. We call that �burn rate� these post-Internet days.
It depends on averaging your per-unit variable cost and per-unit revenue over the whole business.
Please let me know if you need any clarification. I'm always happy to answer your questions.
Jun 28th, 2015
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