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Question: problem 3 burleson clinic has fixed costs of 2000000 and...

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Problem 3

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

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

P & L Statement

Revenue                                  3,000,000

Variable costs                           600,000

Gross profit                              2,400,000

Fixed costs                               2,000,000

Net profit                                 $400,000

b. Sketch out a CVP analysis graph depicting the base case situation with number of visits on the x-axis. (Hint: use Excel to produce the sketch. When done, copy/paste the sketch below).

I NEED B ANSWERED ONLY PLEASE

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