Part $1$

A free$-$standing ambulatory care clinic averages $$120$ in charges per patient. Variable costs are approximately $$20$ per patient, and fixed costs are about $1\mathrm{.}8$ million per year. Using these data, how many patients must be seen each day, assuming a $365-$day operation, to reach the break$-$even point?

Part $2$

In $2020,$ the Gastroenterology Clinic of Pasadena Health System had revenue totaling $$14,550,400.$ The Gastroenterology Clinic costs data for a $12-$months period from January $2020$ thought December $2020$ were reported as follows:

Gastroenterology Clinic costs data for a $12-$months period from January $2020$ thought December $2020$

Month, $2020$

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

$7,620$

$984,900$

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

$7,040$

$931,740$

Task for this assignment

$2\mathrm{.}1.$ Find the fixed and variable portion of costs using the high$-$low method.

$2\mathrm{.}2.$ Calculate the contribution margin, the contribution margin ratio, and the per$-$visit revenue, costs, and operating income.

$2\mathrm{.}4.$ Discuss the importance of computation of the contribution margin in evaluating the relationship of cost$,$ volume, and profit.

$2\mathrm{.}3.$ 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?