Please answer questions for ONLY 5.9, I added 5.6 to compare it to 5.9 within 2 of the questions.

5.9 Grandview Clinic has fixed costs of $2 million and an average variable cost rate of $15 per visit. Its sole payer, an HMO, has proposed an annual capitation payment of $150 for each of its 20,000 members. Past experience indicates that the population served will average two visits per year.

a. Construct the base case projected P&L statement on the contract.

b. Sketch two CVP analysis graphs for the clinicone with number of visits on the

x-axis, and one with number of members on the x-axis. Compare and contrast

these graphs with the one in problem 5.6, part d.

c. What is the clinics per-visit contribution margin on the contract? How does this

value compare with the value in problem 5.6, part b?

d. What profit gain can be realized if the clinic can lower per-member utilization to

1.8 visits?

5.6 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 groups base case projected P&L statement.

b. What is the groups contribution margin? What is its breakeven point (in num-

ber 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.