7–2: Calculating the Contribution Margin

Assignment Exercise 7–2: Calculating the Contribution Margin

The Mental Health program for the Community Center has just completed its fiscal year end. The program director determines that his program has revenue for the year of $1,210,000. He believes his variable expense amounts to $205,000 and he knows his fixed expense amounts to $1,100,000.

Required

1. Compute the contribution margin for the Community Center Mental Health Program.

2. What does the result tell you about the program? (Baker 365)

References

Baker, Judith J.. Health Care Finance: Basic Tools for Nonfinancial Managers, 3rd Edition. Jones & Bartlett Learning, 2009-12-18. .