Question
You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as followed: Revenues (10,000 Visits) $400,000 Wages and
You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as followed: Revenues (10,000 Visits) $400,000 Wages and benefits $220,000 Rent $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 variable. Also, assume that the clinic must pay taxes at a rate of 30%. (1) What number of visits is required to breakeven? (10 Points) Break Even = Fixed cost/ contribution= 257,500/34= 7,573.529=7,574 visits (2) What number of visits is required to provide you with an after-tax profit of $100,000? (5Points) (257,500+10,000)/34= 7,868 visits (3) Assume that the base forecast is 10,000 visits. What is the clinics degree of operating leverage (DOL) at this volume level? (5 points)
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