Break-even Analysis Assignment

Break-even Analysis Assignment
Purpose
The purpose of this assignment is to:
To provide learners with the opportunity to develop break-even-analysis skills.

REQUIREMENTS:
Answer the questions and complete the calculations required for the assignment.
Submit your answers on a Word document, with the heading of Week 6 Assignment. For the
questions requiring a written response, please adhere to proper grammar and syntax, and provide
references. For the questions requiring calculations, show all your work and follow the format that
has been provided for the calculations in the lesson for Week 6.

PREPARING THE PAPER
Break-Even Analysis Case Study
You and several of your colleagues business partners have decided to establish an outpatient
fertility clinic in your service area. All of you are very familiar with this patient population base, have
completed an extensive market analysis that demonstrated a great need for the service, and are
comfortable with setting up a business and the costs associated with this special group of patients.
The outpatient fertility clinic will have a fixed cost of $9,788,000 —start-up costs, hiring of specialty
physicians, anesthesiologists, advanced practice nurses and staff nurses, salaries, purchase of
high-technology fertility equipment, and other miscellaneous items.
The fertility clinic will be open Monday through Saturday; 312 days per year.
The fertility outpatient clinic has variable costs of $500 per patient visit —fertility medical equipment,
oxygen supplies, and other miscellaneous items.
Each patient will be charged the following per visit based on patient acuity categories:
1. Simple
2. Moderate
3. Complex

15%
60%
25%

=
=
=

$2,000
$6,500
$10,000

The projected patient visits per year are anticipated to be 7,488 visits. How many patients would the
clinic have to provide services for to break even, and at what point would this occur?
What is your interpretation of the break-even analysis? Is this project a viable and profitable
service? Does the break-even analysis support moving forward with this business? Why, or why
not?

1. How many patients would the clinic have to provide services for to break even, and at
what point would this occur?

2. What is your interpretation of the break-even analysis?

3. Is this project a viable and profitable service?

4. Does the break-even analysis support moving forward with this business?

5. Why, or why not?

6. Calculate the contribution margin for each type of patient served at the fertility clinic.

7. Calculate the total weighted average contributing margin.

8. Calculate the break-even quantity (number of visits).

9. Calculate the number of patients served per day.

10. Calculate the number of days to break-even.
11. Analysis of break-even analysis