5.6

Walk in clinic

Revenues ($10,000,000)

Variable cost per inpatient day $200.00

Charge (revenue) per inpatient day= 1,000

Review the walk-in clinic data presented in Problem 5.5 Construct projected P&L statements at volume levels of 8,000, 9,000, 10,000, 11,000 and 12,000 visits

A). Assume that the base case forecast is 10,000 visits. What is the clinics degree of operating leverage (DOL) at this volume level?

Confirm the net incomes at the other volume levels using the DOL combine with the percent changes in volume.

B). Now assume that the base case volume is 9,000 visits. What it the DOL at this volume?