Assume that a radiologist group practice has the following cost structure: Fixed Cost: $350,000 Variable Cost per Procedure: $12.50 Charge (revenue) per procedure: $85 Expected Volume: 7,000 procedures.
a. What volume is required to provide a pretax profit of $100,000?
b. Assume that the group is considering contracting with a single payer who requires a 10% discount on charges for all patients. Re-do a-d and explain whether the group should take the contract.