Question

VIP-MD is a health maintenance organization (HMO) located in North Carolina. Unlike the traditional fee-for-service model that determines the payment according to the actual services used or costs incurred, VIP-MD receives a fixed, prepaid amount from subscribers. The per member, per month rate (PMPM) is determined by estimating the health care cost per enrollee within a geographic location. The average health care coverage in North Carolina costs $360 per month, which is the same amount irrespective of the subscriber’s age. Because individuals are demanding quality care at reasonable rates, VIP-MD must contain its costs to remain competitive. A major competitor, National Physicians, entered the North Carolina market early in the current year with a monthly premium of $317. VIP-MD wants to maintain its current market penetration and hopes to increase its enrollees in the current year. The latest data on the number of enrollees and the associated costs follow:

Age	Enrollment in Current Year				Projected Enrollment Next Year				Average Monthly Cost in Current Year
1–4		44,888				48,177			$	11,147,072
5–14		81,656				83,863				10,058,832
15–19		95,073				95,087				8,436,024
20–24		65,446				67,082				9,538,624
25–34		132,696				131,754				26,431,408
35–44		166,076				174,646				38,881,308
45–54		84,696				90,089				22,741,136
55–64		98,424				101,123				28,690,912
65–74		155,488				160,759				49,517,344
75–84		67,095				71,665				33,431,960
85 years and older		22,699				26,049				24,285,675
		1,014,237				1,050,294			$	263,160,295

Answer 1

Particulars	Amount
a)Total Cost	2631,60,295.00
b)Total No: of enrollment in the current year	10,14,237.00
c)Cost per enrollment(a/b)	259.47
d)Current cost per unit	360.00
e)Required Profit per unit (d-c)	100.53
f)New Price of the Product	317.00
g)Required Profit	100.53
h)Target Cost(f-g)	216.47

*As nothing mentioned specific in question regarding the requirement,hope the required profit and target cost is the answer you are looking for.