Midlife Orthopedics Inc. provides two types of physical therapy service sessions, Injury Rehabilitation and Preventative Care, with
Question:
Midlife Orthopedics Inc. provides two types of physical therapy service sessions, Injury Rehabilitation and Preventative Care, with unit contribution margins of $200 and $300, respectively. Regardless of type, each session requires the use of a certified physical therapist. Midlife Orthopedics has three therapists on staff who each work 2,000 hours per year. Each Injury Rehabilitation therapy session uses 15 minutes of therapist time, and each Preventative Care therapy session uses 45 minutes of therapist time.
Required:
1. What is the contribution margin per hour of therapist time for each type of session (Injury Rehabilitation and Preventative Care)?
2. What is the optimal mix of therapy sessions?
3. What is the total contribution margin earned for the optimal mix?
Step by Step Answer:
Managerial Accounting The Cornerstone Of Business Decision Making
ISBN: 9780357715345
8th Edition
Authors: Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger