Exercise Content

1. An ophthalmology practice is deciding whether to offer prescription eyeglasses for sale in-house. The new service would require training and hiring of additional personnel, inventory for glasses and frames, and some minor space alterations. The utilized space in the office would be a charge allocated to the program. The costs for this new service are:
2. Variable costs: $80 per completed pair of eyeglasses (electricity, labor, supplies)
   Total fixed cost: $36,000
   How much volume does the group need to break even if they charge $100 per pair of eyeglasses? If they charge $200?

   2 Assume that in the problem above, the total market for eyeglasses in this community is 2,400 pairs. What are the market share percentages they need to break even at a $100 price? A $200 price?
   The total market for eyeglasses is 2,400. Now, the consideration of the break-even point shows the amount of market share required to break even.

   The break-even calculations are based on the formula:
   Break-even point = Fixed costs / Price – Variable cost

   Show your calculations.