ancia M Cpen with Case 10.2: Bradley Rehabilitation Clinic Contribution Margin Key concept: Preparing a contribution margin statement and determining costs relevant for a decision about closing he Bradley Rehabilitation Clinic (BRC) provides rehabilitation services for patients with a variety of temporary and chronic conditions. BRC is a wholly owned sub- sidiary of McKee Hospital BRC is currently performing 20,000 rehabilitation sessions per year, which it bills at $100 each. The clinic contains 20 recently purchased, electronically controlled exercise stations. Depreciation on these exercise stations totals $100,000 per year Fixed operating costs (other than exercise station depreciation) total $500,000 per year. Variable costs (such as labor and utilities) are $60 per training session. McKee Hospital allocates $400,000 per year of its overhead costs to BRC The following loss statement reflects results for the current year: . (20,000 x $100) Revenues |$2,000,000 Less: Variable expenses (20,000 x $60) $1,200,000 Depreciation expense $100,000 Other fixed expenses $500,000 Allocated McKee Hospital overhead expense $400,000 $2,200,000 Total expenses $200,000 Net loss McKee Hospital financial analysts have strongly suggested to upper management that BRC be closed due to its losses. As BRC's manager, you disagree with the suggestion about closing but are unsure how best to respond