Question

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

Revenue (10000 visits)	$383,255
Wages and benefit	$206,036
Rent	$5,288
Depreciation	$31,123
Utilities	$2,481
Medical supplies	$50,702
Administrative supplies	$9,964

Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 31 percent rate. What number of visits is required to provide you with an after-tax profit of $85,658?

Answer 1

walk-in clinic.
Statement Showing projected income statement
Revenues (10,000 visits)	$383,255
Less Variable cost:
Cost of Medical supplies	$50,702
Cost of Administrative supplies	$9,964
Total variable cost	$60,666
Contribution Margin (Revenues-total variable costs)	$322,589
Less:Fixed costs
Wages and benefits	$206,036
Rent cost	$5,288
Depreciation Expenses	$31,123
Cost of Utilities	$2,481
Total fixed cost	$244,928
Operating income before tax	$77,661
Income Tax (@ 31%)	$24,075
Net Income	$53,586
Contribution per units=322589/10000	32.2589
(b)
After-tax profit	$85,658
Tax rate	30%
Before tax income	$122,369
	($85658 x 100/70)
Target Profit sales units =	122369+244928/32.2589
Target Profit + Fixed Cost / Contribution Margin per visit	11386 Visits