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Burleson Clinic has fixed costs of $2,000,000 and an average variable cost rate of $30 per visit. Its sole payer, an HMO, has proposed an annual capitation payment of $150 per each of its 20,000 members = $3,000,000 regardless of the number of visits. Past experience indicates the population served will average one visits per year (for a total of 20,000 members x 1 visits per member= 20,000 visits).

a. Construct the groups base case projected P&L statement.

b. Sketch out a CVP analysis graph depicting the base case situation with number of visits (volume) on the x-axis. See Exhibit 5-10. (Hint: complete the following table. Use Excel to produce the sketch. When done, copy/paste the sketch below).

# of Visits	Revenue	Fixed Costs	Total Costs
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
22,000
24,000
26,000
28,000
30,000
32,000
34,000
36,000
38,000
40,000

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