Dental Diversity provides three basic service appointments; Cleaning, Check-up, and Full service. Total annual costs average...

Dental Diversity provides three basic service appointments; Cleaning, Check-up, and Full service. Total annual costs average $750,000. An RVU analysis indicates the following:

Annual Average Appointments RVUs/appointment

Cleaning 3,000 4

Check-ups 3,500 6

Full Service 1,700 10

B. If the goal is a 37.5% profit margin, what should be the price for each type of appointment?

Solutions

Expert Solution

	A	B	A*B
Service Type	Annual Average Appointments	RVUs/appointment	Total RVU
Cleaning	3,000	4	12000
Check-ups	3,500	6	21000
Full Service	1,700	10	17000
Total RVU(C)	50000
Total annual costs average(D)	750,000
Cost per RVU(D/C)	15.00
Profit margin required	37.50%
Sale price per RVU [Cost per RVU/(1-profit margin)]	24.00	=15/(1-37.5%)

	A	B	A*B
Service Type	RVUs/appointment	Sale price per RVU	price for each type of appointment
Cleaning	4	24.00	96
Check-ups	6	24.00	144
Full Service	10	24.00	240

Hence,

price for one appiotment of Cleaning = $96

price for one appiotment of Check-ups= $144

price for one appiotment of Full Service= $240

jeff jeffy answered 2 years ago

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