Fixed Costs and Variable Costs

5.1 Explain the differences between fixed costs and variable costs.

5.3 a. What is cost-volume-profit (CVP) analysis?

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5.7 What are the critical differences in profit analysis when it is conducted in a capitated environment versus a fee-for-service environment?

5.1 Consider the CVP graphs below for two providers operating in a fee-for-service environment:

a. Assuming the graphs are drawn to the same scale, which provider has the greater fixed costs? The greater variable cost rate? The greater per unit revenue?

b. Which provider has the greater contribution margin?

c. Which provider needs the higher volume to break even? d. How would the graphs below change if the providers were operating in a discounted fee-for-service environment? In a capitated environment?

CVP graph on attachment for 5.1 question

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