Assuming that your fixed costs for a Rehabilitation Center are $125,000 per year. Your average variable expenses come to $25 per procedure.
1. What are the total fixed costs if 10,000 procedures are performed?
2. What would they be if the volume increased to 20,000 procedures?
1. total fixed cost (10,000 procedures) = 125,000+25*10,000
= 125,000 + 250,000
= $ 375,000
2. total fixed cost (20,000 procedures) = 125,000 + 25*20,000
= 125,000 + 500,000
= $ 625,000
Thank you so much.
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