Question

St Barnabas Hospital is opening a satellite office. Your financial projections for the first year of operations are as follows: Revenues (10,000)        $500,000 Wages and Benefits      $350,000 Rent                                   8,000 Depreciation                    50,000 Utilities                             4,500 Medical Supplies             70,000 Administrative Supplies 20,000

Assume that all cost are fixed except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 30 percent rate. Construct the clinics projected P & L statement.

Insert your response here.

What number of visit is required to break-even?

Insert your response here.

What number of visits is required to provide you with an after-tax profit of $100,000?

Insert your response here.

Answer 1

Projected P&L Statement
Revenue (10000 visits)				500,000
Fixed Cost
Wages and Benefits			350,000
Rent			8,000
Depreciation			50,000
Utilities			4,500	412,500
Variable Cost
Medical Supplies			70,000
Administrative Supplies			20,000	90,000
Total Cost				502,500
Net Loss				-2,500
Taxes@30%				0
Number of visit is required to break-even
Breakeven =		Fixed Cost
		Revenue - Variable cost
Revenue per visit		50
Variable cost per visit		9
Breakeven =		412,500
		50-9
		10061 visits
For After tax profit of $100,000
Profit before tax should be	=100000/70%	$142,857
Add : Fixed Cost			$412,500
Contribution			$555,357
Contribution per unit(Sales - Variable cost)=	$41
Number of visits required to earn profit =	$555,357
			41
=		13545