you are considering starting a walk in clinic. Your financial projections are as follows: revenues $400,000, wages and benefits 220000, rent $5,000., depreciation $30,000., utilities $2,500., medical supplies $50,000. and administrative costs $10,000. Assume all costs are fixed, except supply costs which are variable. Furthermore assume that the clinic must pay taxes at a 30 percent rate.What number of visits is required to break even?
To calculate the number of visits required to break even, we need to determine the fixed costs and the variable costs per visit.
Fixed costs:
- Wages and benefits: $220,000
- Rent: $5,000
- Depreciation: $30,000
- Utilities: $2,500
- Administrative costs: $10,000
Total fixed costs = $220,000 + $5,000 + $30,000 + $2,500 + $10,000 = $267,500
Variable costs:
- Medical supplies: $50,000
Revenue:
- Revenues: $400,000
Profit before taxes = Revenue - Fixed Costs - Variable Costs
To calculate the profit before taxes per visit, we divide by the number of visits:
Profit before taxes per visit = (Revenue - Fixed Costs - Variable Costs) / Number of visits
To break even, the profit before taxes should be zero:
Profit before taxes per visit = 0
Now we can set up the equation:
(Revenue - Fixed Costs - Variable Costs) / Number of visits = 0
Substituting the values:
($400,000 - $267,500 - $50,000) / Number of visits = 0
Simplifying:
$82,500 / Number of visits = 0
To solve for the number of visits required to break even, we divide both sides of the equation by $82,500:
Number of visits = $82,500 / 0
Since division by zero is undefined, the number of visits required to break even cannot be calculated with the given information.