Question

You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows:

Revenues (20,000 visits)	$1,000,000
Wages and benefits	400,000
Rent	20,000
Depreciation	50,000
Utilities	5,000
Medical supplies	100,000
Administrative supplies	20,000

Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 35 percent rate.

1) What is the breakeven number of visits?

2) What are the number of visits to obtain a profit of $500,000

Answer 1

1.
Sales per patient=1000000/20000=50.0000

Variable costs per patient=100000/20000=5.0000

Breakeven=Total Fixed costs/(Sales per patient-Variable costs per patient)=(400000+20000+50000+5000+20000)/(50-5)
=11000.0000

2.
=(Profit/(1-tax rate)+Total Fixed costs)/(Sales per patient-Variable costs per patient)
=(500000/(1-35%)+20000+5000+50000+20000+400000)/(50-5)
=28094.0171