828 Words4 Pages

5.3] Assume that a Radiologist group practice has the following cost structure - Fixed Costs $500,000; Variable Cost per procedure $25 and Charge per procedure $100. Furthermore, assume that the group expects to perform $7500 procedures in the coming year.
a) Construct the group's base case projected P & L statement.
b) What is the group's contribution margin? What is it's breakeven point?
c) what volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000?
d) Sketch out a CVP analysis graph depicting the base case situation?
e) Now assume that the practice contracts with one HMO, and the plan proposes a 20% discount from charges. Redo questions a, b, c, and d under these conditions.
a) Construct the group's base case projected P & L statement.
| Number of procedures | Rate per procedure | Amount | Revenue | 7500 | $100 | $750,000 | Variable cost | 7500 | $25 | $187,500 | Contribution Margin | $562,500 | Less: Fixed Cost | | | $500,000 | Net Income | | | $62,500 |
b) What is the group's contribution margin? What is it's breakeven point?
Contribution Margin = Sale price – Variable cost = $100 - $25 = $75 Breakeven Point = Fixed Cost ÷ Contribution per unit = $500,000 ÷ $75 = 6,667 procedures
c) what volume is required to provide a pretax profit of $100,000? A pretax profit of $200,000?
Volume required to provide a pretax profit $100,000
= (Fixed cost + Desired profit) ÷ Contribution margin = (500,000 + 100,000) ÷ 75 = 8,000
Volume required to provide a pretax profit $200,000
= (Fixed cost + Desired profit) ÷ Contribution margin = (500,000 + 200,000) ÷ 75 = 9,334
d) Sketch out a CVP analysis graph depicting the base case situation?
-------------------------------------------------
Revise

Related

## Fi 515 Essay

473 Words | 2 PagesAnswer Market value per share =$75 Common equity= 6,000,000 Number of share outstanding =800,000,000 Market to book ration = $75/(6,000,000/800,000,000) 6,000,000/800,000,000=.75 Market to book ration= 75/.75= 100 3-4 Price/Earnings Ratio A company has an EPS of $1.50, a cash flow per share of $3.00, and a price/cash flow ratio of 8.0. What is its P/E ratio? Answer Price /cash flow ratio= price per share/ cash flow per share Price per share = $8 x $3 = $24 P.E = Price per share / EPS P.E = $24 / 1.5 = 16 3-5 ROE Needham Pharmaceuticals has a profit margin of 3% and an equity multiplier of 2.0. Its sales are $100 million and it has total assets of $50 million. What is ROE Answer ROE= profit margin x asset turnover x equity multiplier =3% asset turnover = sales/asset = 50/100= 2 equity multiplier=2 ROE= 3% x2 x2= 12% 3-6 Du Pont Analysis Donaldson & Son has an ROA of 10%, a 2% profit margin, and a return on equity equal to 15%.

## Fi 515 Essay

922 Words | 4 PagesWhat is its ROE? ROE= profit margin*asset turnover*equity multiplier Asset turnover 3%= sales $100 million/$50 assets=2 equity multiplier=2 3%*2*2=12 3-6 Du Pont Analysis Donaldson & Son has and ROA of 10%, a 2% profit margin, and a return on equity equal to 15%. What is the company’s total assets turnover? What is the firm’s equity multiplier? ROA= 10%; Profit Margin =2%; ROE= 15% 10/2= S/TA=5 15/10=

## Acc 291 Final Exam Question Answers

2435 Words | 10 PagesThey were given a 10% discount by the manufacturer. They paid $400 for shipping and sales tax of $3,000. Stine estimates that the machinery will have a useful life of 10 years and a residual value of $20,000. If Stine uses straight-line depreciation, annual depreciation will be • $3,760. • $4,072.

## Fi515 3-1 Essay

357 Words | 2 PagesAnswer AR= 20x20000=400,000 3-2 Debt Ratio Vigo Vacations has an equity multiplier of 2.5. The company’s assets are financed with some combination of long-term debt and common equity. What is the company’s debt ratio? Answer Equity multiplier Asset /equity = 2.5/1 A=L+E 2.5=1.5=+1 Debt/asset = 1.5/2.5 = .6 3-3 Market/Book Ratio Winston Washers’s stock price is $75 per share. Winston has $10 billion in total as- sets.

## Homework 35 Essay

508 Words | 3 PagesThe ex-dividend date is March 19 and there are 1 million shares outstanding. The payment date is set at March 31. Show all the necessary journal entries for this set of dividend transactions. (Points : 20) 5. The weight of common stock in a company is 50%, the weight of preferred stock is 10% and the weight of long-term debt is 40%.

## Specialty Toys Case Study

1182 Words | 5 PagesSpecialty Toys Case Study 1. The mean is 20,000 units and there is a 95% probability that demand will be between 10, 000 and 30,000 units. This means there is a .025% chance that the demand will be outside of 10,000 and 30,000. Using the chart, we find that z=-1.96. Using the following calculation, we find: z= x- μ σ -1.96 = 10,000 – 20,000 σ σ=5102 Standard deviation σ = 5,102 μ = 20,000 mean 2.

## Unit 4 Essay

509 Words | 3 PagesNow, what would be the impact on net income, total profit margin, and cash flow? Their depreciation would be $750,000. The total revenue minus total expense will equal net income. Net income and revenue will be times by 100 to get the profit margin. Net income plus depreciation will equal their cash flow.

## Groups Essay

370 Words | 2 PagesExplain Problem 2: Sale-Leaseback Sangamon signs a sale-leaseback with a buyer, Bismark. Under the terms of the contract, Bismark will pay $146,874 in cash to Sangamon for equipment and then immediately lease it back to Sangamon. The equipment originally cost $100,000 and had a carrying value of $80,000 on Sangamon’s books immediately prior to the transaction. In 5 years, the residual value of the leased equipment is estimated to be $20,000 when the lease terminates. The lease contract obligates Sangamon to make five equal annual payments of $30,000 to Bismark that begin immediately after the sale.

## Midland Chemical Co.

754 Words | 4 Pagesa. Which loan carries the lower effective rate? Consider fees to be the equivalent of other interest. Loan with a compensating balance. $500,000 at 8.25% = Interest at $41,250 With a $500,000 loan the 20% compensating balance requirement would be $100,000 which leaves $400,000 in available funds.

## Dixon Essay

1812 Words | 8 PagesWhat is the conversion price? The conversion price is the face value of the bond divided by the conversion ratio. In this case: P= Face value $10, 000 = Conversion ratio 450 P = $22.22. 5. Acort Industries owns assets that will have an 80% probability of having a market value of $50 million in one year.

### Fi 515 Essay

473 Words | 2 Pages### Fi 515 Essay

922 Words | 4 Pages### Acc 291 Final Exam Question Answers

2435 Words | 10 Pages### Fi515 3-1 Essay

357 Words | 2 Pages### Homework 35 Essay

508 Words | 3 Pages### Specialty Toys Case Study

1182 Words | 5 Pages### Unit 4 Essay

509 Words | 3 Pages### Groups Essay

370 Words | 2 Pages### Midland Chemical Co.

754 Words | 4 Pages### Dixon Essay

1812 Words | 8 Pages