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The Mental Health program for the Community Center has just completed its fiscal year end....

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Accounting

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?

Cost-Volume-Profit (CVP) Ratio and Profit-Volume (PV) Ratio

Calculating the PV Ratio

The profit-volume (PV) ratio is also known as the contribution margin (CM) ratio. Use the same assumptions for the Community Center Mental Health Program. In addition to the contribution margin figures already computed, now compute the PV ratio (also known as the CM ratio).

Calculating the PV Ratio and the CVP Ratio

Use the same assumptions for the Greenside Clinic. One more assumption will be added: the clinic had 35,000 visits.

Required

1. In addition to the contribution margin figures already computed, now compute the PV ratio (also known as the CM ratio).

2. Add another column to your worksheet and compute the clinics per-visit revenue and costs.

3. Create a Cost-Volume-Profit chart.

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