Assume that a radiologist group practice has the following cost structure:
Fixed Cost $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 groups base case projected P & L statement.
B. What is the groups contribution margin? What is its breakeven point?
C. What volume is required to provide a pretax profit of $100,000?
D. Sketch out a CVP analysis graph depicting the base case situation.
E. Now assume that the practice contracts with one HMO, and the plan purpose a 20 percent discount from charges. Redo questions a, b, c, and d under those conditions.