Found in Fundamentals of Healthcare Finance 2nd ed. (Please show work)
Assume that a radiology group practice has the following cost structure.
Fixed Costs $500,000
Variable Cost Per Procedure 25
Charge (Revenue) Per Procedure 100
Furthermore, assume that the group expects to perform 7,500 procedures in the coming year.
a. Construct the group’s base case projected P&L statement.
b. What is the group’s contribution margin? What is it breakeven point?
c. What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000?