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Question - Triangle Health Center 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 the center can increase the number of visits to 1,200 per year by cutting the price per visit by $5 and increasing the fixed advertising budget by $5,000.
Projected Visits 1,000
Price per visit $50
Variable cost per visit $30
Fixed costs $15,000
a. Construct the base case projected P&L statement based on initial projections with no change.
b. Construct the base case projected P&L statement incorporating the changes suggested by the manager.
c. What level of volume (# of visits) is needed for the clinic to breakeven after incorporating the changes?
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