Assume that Teton Orthopaedic & Sports Clinic has the following cost structure:

Question

Assume that Teton Orthopaedic & Sports Clinic has the following cost structure:

6000

Assume that Teton Orthopaedic & Sports Clinic has the following cost structure:

Use this data for the Teton Orthopaedic & Sports Clinic (click the link to see the data) to answer the question below.

Answer all parts of the question and please label your answers clearly.
a What is the clinic's per unit contribution margin? (1 point)
b What is the clinic's overall contribution margin?(1 point)
c What is the clinic's volume (accounting) breakeven point?(2 points)
d What volume is required to obtain a profit of $100,000? (2 points)

Fixed Costs $300,000 Variable Cost Per Procedure $30 Charge Per Procedure $90 Estimated Number of Procedures

6000

Assume that Teton Orthopaedic & Sports Clinic has the following cost structure:

Fixed Costs $300,000 Variable Cost Per Procedure $30 Charge Per Procedure $90 Estimated Number of Procedures 6000

Use this data for the Teton Orthopaedic & Sports Clinic (click the link to see the data) to answer the question below.

Answer all parts of the question and please label your answers clearly.
a What is the clinic's per unit contribution margin? (1 point)
b What is the clinic's overall contribution margin?(1 point)
c What is the clinic's volume (accounting) breakeven point?(2 points)
d What volume is required to obtain a profit of $100,000? (2 points)

Explanation / Answer

a) Contribution margin per unit = 90-30= 60 per procedure

b) Contribution margin ratio = 60*100/90 = 66.67%

c) Break even point (units) = Fixed cost/contribution margin per unit = 300000/60 = 5000 units

d) Required units = (Fixed cost+desired profit)/Contribution margin per unit = (300000+100000)/60 = 6667 units

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