Requirement 3. Dr. Young had a chance to do some school physicals that would have boosted physician contact hours billed to patients from 200 to 250 hours. Suppose Dr. Young, guided by the linear cost function, rejected this job because it would have brought a total increase in contribution margin of $9,000, before deducting the predicted increase in total overhead cost, $10,000. What is the total contribution margin actually forgone?
Requirement 3. Dr. Young had a chance to do some school physicals that would have boosted physician contact hours billed to patients from 200 to 250 hours. Suppose Dr. Young, guided by the linear cost function, rejected this job because it would have brought a total increase in contribution margin of $9,000, before deducting the predicted increase in total overhead cost, $10,000. What is the total contribution margin actually forgone?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Requirement 3. Dr.
overhead cost,
Young
had a chance to do some school physicals that would have boosted physician contact hours billed to patients from
200
to
250
hours. Suppose Dr.
Young,
guided by the linear cost function, rejected this job because it would have brought a total increase in contribution margin of
$9,000,
before deducting the predicted increase in total $10,000.
What is the total contribution margin actually forgone?Determine the total contribution margin actually forgone by rejecting the special job that would have boosted professional labor-hours from
200
to
250
hours. The job would have brought a total increase in contribution margin of
$9,000,
before deducting the predicted increase in total overhead cost,
$10,000.
|
Contribution before deducting incremental overhead
|
$9,000
|
|
|
Less:
|
Incremental overhead based on actual
|
6,000
|
|
Total contribution margin actually forgone
|
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