What volume is required to provide a pretax profit

Question

Assume that a radiologist 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.

1. Construct the group's base case projected P&L statement.
2. What is the group's contribution margin? What is its breakeven point?
3. What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000?
4. Sketch out a CVP analysis graph depicting the base case situation. Now assume that the practice contracts with one HMO, and the plan proposes a 20 percent discount from charges. Redo questions a, b, c, and d under these conditions.