Discuss the importance of computation of the contribution margin in

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 Find the fixed and variable portion of costs using the high-low method. Calculate the contribution margin, the contribution margin ratio, and the per-visit revenue, costs, and operating income. Discuss the importance of computation of the contribution margin in evaluating the relationship of cost, volume, and profit. 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? Length: 3–4 pages, excluding title page and references. Required Reading Berenson, R. A., & Rich, E. C. (2010). U.S. approaches to physician payment: The deconstruction of primary care. Journal of General Internal Medicine, 25(6), 613-618. Chang, K. & Said, A.A. (2014). The impact of outsourcing on hospital performance. International Journal of Management Accounting Research, suppl. Special Issue. Health Care Costs and Performance, 4(1), 7-26. Hennig-Schmidt, H., Selten, R., & Wiesen, D. (2011). How payment systems affect physicians’ provision behavior – An experimental investigation. Journal of Health Economics, 30(4), 637-646.

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