Contribution Margin, Product Margin and Breakeven. Capital Community Hospital is opening a new Radiation Oncology division within its Cancer Center. This service will add revenues while eliminating the costly travel and inconvenience to many patients that heretofore have to travel over 150 miles to receive this service. The new service plans to share waiting space, registration space, a full time medical director and a full time service line manger with the other existing Cancer Center Programs. There are no plans under foreseeable conditions that these positions would become part time. The following information is available:

a. Determine the Total Contribution Margin, Total Product Margin and Net Income for the new service.

b. Determine the breakeven point in number of patients.

c. Determine the breakeven point to cover the direct costs.

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Total waiting space (sq. ft) Total allocated cost 1,000 $3,500 Space for radiation oncology (sq. ft) 400 Salary: Service Line Manager $65,000 % Service Line Manager and Medical Director assigned to radiation oncology 30% New space upfit cost (10 year useful life) $550,000 Utilities/year 6,000 Lease for linear accelerator/year $60,000 Film supplies/treatment Other supplies/treatment Medical Director salary Staffing for radiation oncology Revenue/treatment Treatments/patient Total patients/year $14 $75 $166,667 $150,000 $212 25 150