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MPA Pediatrics currently provides 1,000 visits per year at a price of $50 per visit.The variable cost per visit (variable cost rate) is $30, and total fixed costs are $15,000.The business manager suggests that MPA Pediatrics can increase the number of visits to 1,200 per year by cutting the price per visit by 10% and increasing the fixed advertising budget by $5,000.
a. Construct the base case P&L statement. Please show Contribution Margin (per unit) in your analysis.
b. What is MPA Pediatrics break even? How many patients would have to visit MPA Pediatrics for them to have an economic profits of $6,500?
c. What is the projected P&L statement incorporating the proposed change? Please show Contribution Margin (per unit) in your analysis
d. Based on the proposed changes, how much would visits/volume need to increase in order for MPA Pediatrics to break even?
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