Reference no: EM131538713
Assignment
In 2013, the Gastroenterology Clinic of Pearland Medical Center had revenue totaling $14,550,400. The Gastroenterology Clinic costs data for a 12-month period from January 2013 through December 2013 were reported as follows:
|
Month, 2013
|
Number of Patient Visits
|
Gastroenterology Clinic Costs, $
|
|
January
|
6,755
|
945,700
|
|
February
|
6,620
|
946,660
|
|
March
|
5,834
|
880,934
|
|
April
|
6,228
|
927,972
|
|
May
|
7,554
|
944,250
|
|
June
|
7,620
|
914,400
|
|
July
|
7,136
|
949,088
|
|
August
|
7,440
|
959,760
|
|
September
|
6,453
|
942,138
|
|
October
|
5,325
|
825,375
|
|
November
|
5,588
|
854,964
|
|
December
|
7,020
|
961,740
|
1. Find the fixed and variable portion of costs using the high-low method.
2. Calculate the contribution margin, the contribution margin ratio, and the per-visit revenue, costs, and operating income.
3. Discuss the importance of computation of the contribution margin in evaluating the relationship of cost, volume, and profit.
4. In deciding to continue (or to discontinue) a service, which revenues currently do not cover total cost, which is more important in the short run, variable cost or fixed cost? In the long run (with more service volume)? Why?