I am team 2

Chapter 5 is about cost behavior and how managers perform analysis using Cost-Volume-Profit Analysis. Problem 5.5 is about a Walk-In Clinic that receives revenue on a Fee for Service basis. Prior to class each student completed answering question 5.5 a-c as Homework. This is referred to as the Base Case. I shared with students the one page solution. The excel spreadsheet used in that solution is posted in Modules, Week 2 in Canvas and can be downloaded from Canvas. The solution includes formulas related to Contribution Margin, Pre necessary to have an accounting breakeven of $0 after-tax profit (7,574 visits) and an economic breakeven of $100,000 after-tax profit (11,775 visits). The key to determining the volume to achieve $100,000 after-tax profit was to determine the pre-tax profit ($100,000/(1-tax rate)=$142,857). The group project expands on the Base Case (5.5) by creating three alternatives that need to be considered. The concept of Relevant Range also is introduced. The three alternatives are listed on lecture slide 5-47 in Canvas, which is repeated below for simplicity. Team 1 IPPO 5,000 visits (not incremental) Relevant Range (7,500 - 12,500 visits) 40% discount 1 Team 2 IHMO 2,500 new visits (incremental) Relevant Range (7,500 - 12,500 visits) 40% discount Team 3 HMO 5,000 new visits (incremental) Outside Relevant Range (7,500 - 12,500 visits) Fixed Costs +50% (Large Step) 40% discount Each of the three alternatives presents the management of Walk-in Clinic (you!) with a potential change in volume and price. The question that each team must address is whether Walk-in Clinic should accept or reject the business offer and why. As you consider the changes to price and volume, please answer the same three questions as we had in 5.5, plus graph the results (slide 5-46): a) Construct the Clinics projected P&L statement b) What is the number of visits to breakeven (after-tax profit = $0) c) What is the number of visits required to provide the Walk-in Clinic with an after-tax profit of $100,000 d) Graph of Revenue and Cost, identifying breakeven(s). wunt from mu un hospital agree to the discount proposal 5.5 You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenues (10,000 visits) Wages and benefits $400,000 Rent 220,000 5,000 Depreciation 30,000 Utilities 2,500 Medical supplies 50,000 Administrative supplies 10,000 Assume that all costs are fixed, except supply costs, which are vari able. Furthermore, assume that the clinic must pay taxes at a 30 per cent rate. a. Construct the clinic's projected P&L statement. b. What number of visits is required to break even? c. What number of visits is required to provide you with an are profit of $100,000? blems