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
Further more, assume that the group expects to perform 7,500 procedures in the coming year.
a. Construct the group's base case projected profit and loss statement.
b. What is the group's contribution margin? What is its breakevenpoint?
c. What volume is required to provide a pretax pro?t of $100,000? A pretax proit of $200,000?
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 proposes a 20 percent discount from charges.