Assume that a radiologist group practice has the following cost structure:

Fixed Cost:                $350,000

Variable Cost per Procedure:    $12.50

Charge (revenue) per procedure:    $85

Expected Volume:           7,000 procedure

Construct the group’s base case projected P&L statement

What is the group’s contribution margin?

What is the group’s breakeven point?

What volume is required to provide a pretax profit of $100,000

Assume that the group is considering contracting with a single payer who requires a 10% discount on charges for all patients. Re-do a-d and explain whether the group should take the contract.