Problem $3$

South Lancaster Clinic has fixed costs of $$4,000,000$ and an average variable cost rate of $$60$ per $v$ sole payer, an HMO, has proposed an annual capitation payment of $$300$ per each of its $40,000$ members $=$$$12,000,000$ regardless of the number of visits. Past experience indicates the populati served will average two visits per year $($for a total of $40,000$ members $2$ visits per member $=80,0$ visits$).$

a$.$ Construct the group's base case projected P&L statement.

b$.$ Sketch out a CVP analysis graph depicting the base case situation with number of visits $($volume the x$-$axis. See Exhibit $5-10.($Hint: complete the following table. Use Excel to produce the sketch. done, copy$/$paste the sketch below$)$