You Are Evaluating Ways to Expand an Optometry Practice and Its

question 5

Essay

You are evaluating ways to expand an optometry practice and its earnings capacity. Optometrists perform eye exams, prescribe corrective lenses (eyeglasses and contact lenses), and sell corrective lenses. One way to expand the practice is to hire an additional optometrist. The annual cost of the optometrist, including salary, benefits, and payroll taxes, is $63,000. You estimate that this individual can conduct two exams per hour at an average price to the patient of $45 per exam. The new optometrist will work 40-hour weeks for 48 weeks per year. However, because of scheduling conflicts, patient no-shows, training, and other downtime, the new optometrist will not be able to conduct, bill, and collect 100 percent of his or her available examination time.
From past experience, you know that each eye exam drives additional product sales. Each exam will lead to either an eyeglass sale with a net profit (revenue less cost of sales) of $90 (not including the exam fee) or a contact lens sale with net profits of $65 (not including the exam fee). On average, 60 percent of the exams lead to eyeglass sales, 20 percent lead to contact lens sales, and 20 percent of the exams lead to no further sales.
Besides the salary of the optometrist, additional costs to support the new optometrist include: $$\begin{array} { | l | r | } \hline \text { Office occupancy costs } & \$ 1,200 / \text { year } \\\hline \text { Leased equipment } & \$ 330 / \text { year } \\\hline \text { Office staff } & \$ 23,000 / \text { year } \\\hline\end{array}$$ Required:
In terms of the percentage of available time, what is the minimum level of examinations the new optometrist must perform to recover all the incremental costs of being hired?

Comprehend the concepts of internal and external equity in compensation.

Analyze the impact of compensation strategies on employee behavior and organizational objectives.

Understand legal frameworks and ethical considerations in compensation management.

Identify the role of market forces in compensation management.

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Definitions:

Frequency of Intercourse

A demographic measure referring to the average number of sexual encounters between partners over a specified period.

Frequency of Sexual Fantasies

A measure of how often an individual experiences sexual fantasies.

Refractory Period

A period immediately following stimulation during which a nerve or muscle is unresponsive to further stimulation.

Orgasm

A peak of sexual pleasure characterized by intense sensations and involuntary muscle contractions in the body.