Dr. Jones' accountant has told him he will need to clear an additional $200,000 of cash flow (above break-even) in order to pay the debt service on the cost of the equipment and yield the required return on the investment. 

What volume of cases does Dr. Jones need to do to meet this target? 

What is the average cost per case at this volume?

Dr. Jones is deciding on whether to open a Surgery Center. He estimates that the annual Fixed Overhead costs for the center will be $100,000. He also estimates that he will have $75,000 is fixed staffing costs. Dr. Jones accountant has told him that his variable costs will be $250 per surgical case in staffing costs, plus an additional $75 per case in medical supplies. In studying the fee schedules of Medicare and Blue Cross, Dr. Jones feels that he will earn approximately $750 per case based on both the payer mix and types of procedures he will be performing.

What is Dr. Jones' incremental profit per case?

Based on the information given, what volume of cases does Dr. Jones need to have in order to break-even?

Answer rating: 100% (QA)

To determine the volume of cases Dr Jones needs to meet the target of clearing an additional 200000 of cash flow well first calculate the contribution ... View the full answer