$6.$ Assume that a radiology group practice 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 its breakeven point

$($in number of procedures$)?$

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

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 for all $7,500$ procedures

and the plan proposes a $20$ percent discount from charges. Answer questions

a$,$ b$,$ c$,$ and d again under these conditions