Question: The problem: 5.6 The fixed cost for a group practice is $500,000, Variable cost per procedure is 25 and the charge per procedure is 100.

The problem: 5.6

The fixed cost for a group practice is $500,000, Variable cost per procedure is 25 and the charge per procedure is 100. The group predicts to perform 7500 procedures in the year. How would I construct the group's base case projected P&L statement? What is the group's contribution margin? What is the breakeven point (in number of procedures)? What volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000? Sketch out a CVP analysis graph depicting the base case situation. Assuming that the practice contracts with one HMO for all 7500 procedures and the plan proposes a 20 percent discount from charges...How would this affect previous answers under these conditions?

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