Scenario 20

question 47

Multiple Choice

Scenario 20.2 Use the following to answer the questions.
Glenwood Pet Hospital is considering implementing a new pricing strategy for its veterinarian services. After reviewing the previous three years' revenue, Glenwood finds that most of its customers bring their pets in for the required annual vaccinations and then only if the animal is ill. Glenwood's objective is to generate more income per customer on an annual basis. The hospital has previously priced its services by charging a flat fee for the office visit, a fee for each vaccine, and a fee for each type of examination beyond the basic office visit. Most customers pay the flat office fee and a fee for a rabies vaccine. Glenwood is now considering a new plan where the pet owner would pay one fee that would cover an office visit, the required rabies vaccine, and additional vaccines that prevent heartworm, kennel-cough, and fleas. Glenwood hopes to encourage the pet owners to view their pet's health as part of a prevention program, rather than a one-time annual visit.
Refer to Scenario 20.2. Glenwood is considering a markup pricing basis, with the cost for office visit plus vaccines at $45. If Glenwood were to add a markup of 33.3% of the costs, its price would be ____.

• A) $79
• B) $65
• C) $55
• D) $78
• E) $60

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Definitions:

Compounded Annually

Interest on an investment or loan that is calculated once a year on both the initial principal and the accumulated interest from previous periods.

Future Value

The value of an investment or cash flow at a specific future date, considering compounding interest or returns.

Invested

The act of allocating resources, often money, into something to earn a financial return or achieve another economic benefit.

Annually

Refers to an occurrence or calculation done once every year.