Construct the base case projected p and l statement

Reference no: EM132002880

Question: 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 $5 and increasing the fixed advertising budget by $5,000.

a. Construct the base case projected P&L statement and the projected P&L statement incorporating the proposed changes. Please show Contribution Margin in your analysis. Should MPA Pediatrics make the suggested changes?

b. How much would visits/volume need to increase in order for MPA Pediatrics to break even with the proposed changes?

Reference no: EM132002880

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