5.3 Assume that a radiologist group has the following cost structure:

Fixed costs $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 group's base case projected P & L statement.

b. What is the group's contribution margin? What is the breakeven point?

c. What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000?

e.Now assume that the practice contracts with one HMO, and the plan purposes a 20 percent discount from charges. Redo question a, b, c, and d under these conditions.