Question
13) Assume that the interventional radiology department has the following cost structure: (5 POINTS) Fixed costs $500,000 Variable costs/procedure $25.00 Revenue/procedure $100.00 Assume the department
13) Assume that the interventional radiology department has the following cost structure: (5 POINTS) Fixed costs $500,000 Variable costs/procedure $25.00 Revenue/procedure $100.00 Assume the department expects to perform 7,500 procedures.
a) What does the Profit & Loss statement look like?
b) What is the CM (Contribution Margin) and what is the breakeven point (in number of procedures)?
c) What volume is required to provide a pre-tax profit of $100,000? A pre-tax profit of $200,000?
d) Assume that the department contracts with one HMO for all 7,500 procedures and the plan proposes a 20% discount from charges. Answer parts A, B, and C again under the discounted conditions.
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