The hospital where you are employed is considering opening a walk-in clinic. The


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The hospital where you are employed is considering opening a walk-in clinic. The financial projections for the first year of operations are as follows:
Number of visits: 10,000
Wages and benefits: $220,000
Rent: $5,000
Depreciation: $30,000
Utilities: $2,500
Medical supplies: $50,000
Administrative supplies: $10,000
Assume that all costs are fixed except the cost of supplies, which are variable. Respond to the following questions. Be sure to show your work for all calculations.
1. Explain the difference between fixed and variable costs. (2 points)
2. What is the clinic’s underlying cost structure? (2 points)
3. What are the clinic’s expected total costs? (2 points)
4. What are the clinic’s estimated total costs at 7,500 visits? What are the clinic’s estimated total costs at 12,500 visits? (4 points each; 8 points total)
5.What is the average cost per visit at 7,500, 10,000, and12,500 visits? (6 points)

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