I need help solving this question with calculations please try to make it easy to understand

Questions: Question 1. Answer the following questions in relation to the earlier information presented by Pierre to Etienne, the bank manager of Bank XL, described in the section 'The Business Plan: a) Calculate the break-even point for each of the three price lists: 570$, 625$, and 675$. b) Based on the opinion of the bank manager that the clinic would only treat 700 patients regardless of the price list selected, what is the profit/loss for each of the three price lists:570$,625$, and 675$? c) Based on the opinion of Pierre that during the first year the clinic would generate the following profit: 70,000$ if the price list was 570$, 90,000$ if the price list was 625$, and 115,000$ if the price list was 675$; what is total revenue in $ for each of the three price lists? d) Based on the suggestion made by the bank manager in which the total fixed costs could be reduced by 25% and the possibility to lease the equipment at a cost of 35$ per patient treated, do you believe that this suggestion will facilitate to achieve the break-even point faster compared to the original situation? The Business Plan Pierre and his partners visited a number of banks with a view to arranging loan finance. Etienne Lambert, of Bank XL was the most positive, but he them asked to start to put together a business plan, and asked for some initial calculations, Pierre and his partners estimated that their annual fixed costs would be 380,000. They also made the simplistic assumption that the largest variable cost was associated with the number of patients treated. They estimated the variable cost of the average patient treated as 370. Etienne asked for a calculation of the break-even point in patients treated) at three different average price levels 570, 625 and 675. The results were concerning. Etienne believed that, based on these three price levels, the number of patients to be treated in order to breakeven was unrealistically high and they still needed to build their clinic's reputation and expand their network. Etienne asked for a calculation of the profit (or loss) in the first year of operation based on the three different average price levels (570, 625 and 675) but with the assumption that only 700 patients would be treated. Pierre felt that this assumption was overly conservative, if not pessimistic. Even so, he calculated that in the first year the elinie would generate the following profit: 70,000 if the price list was 570, 90,000 if the price list was 625, and 115,000 if the price list was 675. Etienne still had concerns. He suggested that the team turn their attention to the costs, which seemed high. He wondered if these could be negotiated, or if perhaps certain clinical equipment and electronic devices could be leased rather than bought. This could be arranged through Bank XL customers, reducing fixed costs by 25% with the cost of leasing increasing the variable cost per patient treated by 35. Calculations of the expected profit (or loss) in the first year of operation were re-run at 2 120-0023-1 the three different average price levels (570, 6625 and 675) with the assumption that only 700 patients would be treate After several meetings with the Etienne, Pierre and his partners managed to secure a loan to open the Nord Clinic Fast forward three years .... Nord Clinic was launched and survived a difficult first year. Now, things are going well and Pierre and his partners are thinking about expanding. Last month, Pierre attended an interesting conference for entrepreneurs in Grenoble and met a university classmate, Antoine Durand, whose career had mirrored Pierre's. A couple of years ago, he too had opened a private medical clinic. Pierre and Antoine chatted briefly about the many challenges related to medical malpractices and the increasing number of certifications and licenses required, before discussing financial matters. Pierre told Antoine that the current figures from Nord Clinic showed that the annual revenues were 1,100,000 and the total costs were 800,000 of which 55% were fixed and the remaining 45% were variable. Pierre has taken a part-time assistant/business manager called Veronique Leroy. He has been working with her on an evaluation of the following three independent scenarios. First, Pierre considers that there is potential to increase the number of surgeries. This action will increase the annual fixed costs by 250,000, but the contribution margin ratio will remain unchanged. Second, Nord Clinic is considering to increase the price list by 15%. This action will cause a reduction of 10% of the total number of patients treated. The percentage of fixed costs (55%) and variable costs (45%) will not be affected. 3 as the compe patients very The future ahead... new technological developments Apart from these business choices, the directors of Nord Clinic are very aware that new technological developments (e.g., digitalisation of records, integrated IT systems) are paramount for the survival of the business. For example, a powerful system will allow to better integrate patients' records and enhance communication with other clinics and labs. This could be very valuable to understand revenues cycles and cost structures. They are therefore also considering the introduction of a new information system. Pierre has been in talks with several providers of healthcare information management systems and has selected a company called MG Consulting Services to implement the new system. Pierre and the owner of MG Consulting Services', Maxime Girard, had several interesting conversations about the implementation of such healthcare information systems in large hospitals and clinics. As part of this initiative to adopt latest technological approaches and the valuable advice provided by 'MG Consulting Services', Nord Clinic is calibrating the possibility to sell a mobile phone 'app' to his patients to monitor and provide immediate feedback on key healthcare indicators related to their surgeries. It plans to sells two apps: 'basic app' and premium app! A market research study from MG Consulting Services' indicates that the basic app' will outsell 'premium app' by 5:1 ratio. The 'basic app' will sell for 5 and has variable costs of 1.90 while the "premium basic' will sell for 12 and has a contribution margin ratio of 50%. The total fixed costs for the apps are 19,995. Additionally, Pierre had recently an interesting conversation with Luc Petit, an old friend from high school and marketing director of a young start-up called TechLab. The company was originated by a team of talented scientists who already launched a number of successful new medicines to reduce cardiovascular diseases. The technology used by TechLab' is sophisticated and costly, particularly in relation to fixed costs. Following the conversation between Pierre and Luc, Pierre reflected on several challenges faced by TechLab'. Luc asked Pierre advice on a number of issues, particularly on a new medicine named A10. Pierre believes that "TechLab' has great potential but he is concerned about the profitability of the business. Based on the information that Luc shared with Pierre, he found that the average cost per unit of A10 decreased when the production volume increased. He believed that this situation was triggered because of the high level of fixed costs of TechLab'. Pierre also found that the maximum capacity to develop the new medicine A10 was 40,000 units. Some relevant information related to the new medicine A10 is summarised below: Production 25,000 35,000 volume Average cost units 258 30,000 units 230 units 210 40,000 units 195 per unit The average cost per unit of A10 is described as the sum of total variable and fixed costs divided by the total production volume. The actual volume of production and sales is 37,000 units. The actual selling price per unit of medicine A10 is 250. Production volume Average cost per unit 25,000 units 258 30,000 units 230 35,000 units 210 10,000 units 195 The average cost per unit of A10 is described as the sum of total variable and fixed costs divided by the total production volume. The actual volume of production and sales is 37,000 units. The actual selling price per unit of medicine A10 is 250. 5 120-0023-1 In a recent meeting between Pierre and two founders of TechLab', the start-up founders stressed the need to manufacture as much as possible to achieve the maximum capacity level of 40,000 units. Pierre mentioned that Luc Petit had the opportunity of signing a special order for an extra 3,000 units but, due to the fierce market competition, the selling price would only be 190. One of the founders of TechLab', Gabriel Deneuville, was against this proposal. He argued that this special price was under the average cost per unit at maximum production volume and as a result profitability would be reduced. However, Gabriel agreed to accept, only for this particular occasion, to sell the medicine A10 at 195 if the order was increased to 5,000 units. Pierre was not convinced about Gabriel's strategy. Luc had only a few hours to close his initial deal and a quick decision needed to be done... Questions: Question 1. Answer the following questions in relation to the earlier information presented by Pierre to Etienne, the bank manager of Bank XL, described in the section 'The Business Plan: a) Calculate the break-even point for each of the three price lists: 570$, 625$, and 675$. b) Based on the opinion of the bank manager that the clinic would only treat 700 patients regardless of the price list selected, what is the profit/loss for each of the three price lists:570$,625$, and 675$? c) Based on the opinion of Pierre that during the first year the clinic would generate the following profit: 70,000$ if the price list was 570$, 90,000$ if the price list was 625$, and 115,000$ if the price list was 675$; what is total revenue in $ for each of the three price lists? d) Based on the suggestion made by the bank manager in which the total fixed costs could be reduced by 25% and the possibility to lease the equipment at a cost of 35$ per patient treated, do you believe that this suggestion will facilitate to achieve the break-even point faster compared to the original situation? The Business Plan Pierre and his partners visited a number of banks with a view to arranging loan finance. Etienne Lambert, of Bank XL was the most positive, but he them asked to start to put together a business plan, and asked for some initial calculations, Pierre and his partners estimated that their annual fixed costs would be 380,000. They also made the simplistic assumption that the largest variable cost was associated with the number of patients treated. They estimated the variable cost of the average patient treated as 370. Etienne asked for a calculation of the break-even point in patients treated) at three different average price levels 570, 625 and 675. The results were concerning. Etienne believed that, based on these three price levels, the number of patients to be treated in order to breakeven was unrealistically high and they still needed to build their clinic's reputation and expand their network. Etienne asked for a calculation of the profit (or loss) in the first year of operation based on the three different average price levels (570, 625 and 675) but with the assumption that only 700 patients would be treated. Pierre felt that this assumption was overly conservative, if not pessimistic. Even so, he calculated that in the first year the elinie would generate the following profit: 70,000 if the price list was 570, 90,000 if the price list was 625, and 115,000 if the price list was 675. Etienne still had concerns. He suggested that the team turn their attention to the costs, which seemed high. He wondered if these could be negotiated, or if perhaps certain clinical equipment and electronic devices could be leased rather than bought. This could be arranged through Bank XL customers, reducing fixed costs by 25% with the cost of leasing increasing the variable cost per patient treated by 35. Calculations of the expected profit (or loss) in the first year of operation were re-run at 2 120-0023-1 the three different average price levels (570, 6625 and 675) with the assumption that only 700 patients would be treate After several meetings with the Etienne, Pierre and his partners managed to secure a loan to open the Nord Clinic Fast forward three years .... Nord Clinic was launched and survived a difficult first year. Now, things are going well and Pierre and his partners are thinking about expanding. Last month, Pierre attended an interesting conference for entrepreneurs in Grenoble and met a university classmate, Antoine Durand, whose career had mirrored Pierre's. A couple of years ago, he too had opened a private medical clinic. Pierre and Antoine chatted briefly about the many challenges related to medical malpractices and the increasing number of certifications and licenses required, before discussing financial matters. Pierre told Antoine that the current figures from Nord Clinic showed that the annual revenues were 1,100,000 and the total costs were 800,000 of which 55% were fixed and the remaining 45% were variable. Pierre has taken a part-time assistant/business manager called Veronique Leroy. He has been working with her on an evaluation of the following three independent scenarios. First, Pierre considers that there is potential to increase the number of surgeries. This action will increase the annual fixed costs by 250,000, but the contribution margin ratio will remain unchanged. Second, Nord Clinic is considering to increase the price list by 15%. This action will cause a reduction of 10% of the total number of patients treated. The percentage of fixed costs (55%) and variable costs (45%) will not be affected. 3 as the compe patients very The future ahead... new technological developments Apart from these business choices, the directors of Nord Clinic are very aware that new technological developments (e.g., digitalisation of records, integrated IT systems) are paramount for the survival of the business. For example, a powerful system will allow to better integrate patients' records and enhance communication with other clinics and labs. This could be very valuable to understand revenues cycles and cost structures. They are therefore also considering the introduction of a new information system. Pierre has been in talks with several providers of healthcare information management systems and has selected a company called MG Consulting Services to implement the new system. Pierre and the owner of MG Consulting Services', Maxime Girard, had several interesting conversations about the implementation of such healthcare information systems in large hospitals and clinics. As part of this initiative to adopt latest technological approaches and the valuable advice provided by 'MG Consulting Services', Nord Clinic is calibrating the possibility to sell a mobile phone 'app' to his patients to monitor and provide immediate feedback on key healthcare indicators related to their surgeries. It plans to sells two apps: 'basic app' and premium app! A market research study from MG Consulting Services' indicates that the basic app' will outsell 'premium app' by 5:1 ratio. The 'basic app' will sell for 5 and has variable costs of 1.90 while the "premium basic' will sell for 12 and has a contribution margin ratio of 50%. The total fixed costs for the apps are 19,995. Additionally, Pierre had recently an interesting conversation with Luc Petit, an old friend from high school and marketing director of a young start-up called TechLab. The company was originated by a team of talented scientists who already launched a number of successful new medicines to reduce cardiovascular diseases. The technology used by TechLab' is sophisticated and costly, particularly in relation to fixed costs. Following the conversation between Pierre and Luc, Pierre reflected on several challenges faced by TechLab'. Luc asked Pierre advice on a number of issues, particularly on a new medicine named A10. Pierre believes that "TechLab' has great potential but he is concerned about the profitability of the business. Based on the information that Luc shared with Pierre, he found that the average cost per unit of A10 decreased when the production volume increased. He believed that this situation was triggered because of the high level of fixed costs of TechLab'. Pierre also found that the maximum capacity to develop the new medicine A10 was 40,000 units. Some relevant information related to the new medicine A10 is summarised below: Production 25,000 35,000 volume Average cost units 258 30,000 units 230 units 210 40,000 units 195 per unit The average cost per unit of A10 is described as the sum of total variable and fixed costs divided by the total production volume. The actual volume of production and sales is 37,000 units. The actual selling price per unit of medicine A10 is 250. Production volume Average cost per unit 25,000 units 258 30,000 units 230 35,000 units 210 10,000 units 195 The average cost per unit of A10 is described as the sum of total variable and fixed costs divided by the total production volume. The actual volume of production and sales is 37,000 units. The actual selling price per unit of medicine A10 is 250. 5 120-0023-1 In a recent meeting between Pierre and two founders of TechLab', the start-up founders stressed the need to manufacture as much as possible to achieve the maximum capacity level of 40,000 units. Pierre mentioned that Luc Petit had the opportunity of signing a special order for an extra 3,000 units but, due to the fierce market competition, the selling price would only be 190. One of the founders of TechLab', Gabriel Deneuville, was against this proposal. He argued that this special price was under the average cost per unit at maximum production volume and as a result profitability would be reduced. However, Gabriel agreed to accept, only for this particular occasion, to sell the medicine A10 at 195 if the order was increased to 5,000 units. Pierre was not convinced about Gabriel's strategy. Luc had only a few hours to close his initial deal and a quick decision needed to be done