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What volume is required to provide a pretax profit of

Question - Assume that a radiology group practice has the following cost structure:

Fixed costs: $500,000

Variable costs per procedure: $25

Charge (revenue) per procedure: $100

Assume that the group expects to perform 7,500 procedures in the coming year.

Now, assume that the practice contracts with one HMO and the plan proposes a 20 percent discount from charges. What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? Make any necessary assumptions about utilization.

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Accounting Basics: What volume is required to provide a pretax profit of

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