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Business Finance Healthcare Finance: An Introduction to Accounting and Financial Management

A profit and loss statement and to explain its elements. Introduction: The profit & loss statement is prepared by the company at the end of the year to calculate the net profit or net loss for the year. It is calculated by deducting variable cost and fixed cost from the total sales revenue. The profit & loss statement is prepared as follows: Particular Amount ($) Total revenue ($100 × 50,000) 5,000,000 Total variable costs ($25 × 50,000) 1,250,000 Total contribution margin ($75 × 50,000) 3,750,000 Fixed costs 3,250,000 Profit 500,000 Table 1 In the above table, units of production are 50,000. The variable cost per unit is $25. The difference between the sales revenue and variable cost is the contribution margin. As calculated above, the contribution margin is $75 per unit. The fixed costs remain constant. The profit is calculated by deducting the fixed costs from the contribution margin. In the above table, the profit calculated is $500,000 or $10 per unit.

A profit and loss statement and to explain its elements. Introduction: The profit & loss statement is prepared by the company at the end of the year to calculate the net profit or net loss for the year. It is calculated by deducting variable cost and fixed cost from the total sales revenue. The profit & loss statement is prepared as follows: Particular Amount ($) Total revenue ($100 × 50,000) 5,000,000 Total variable costs ($25 × 50,000) 1,250,000 Total contribution margin ($75 × 50,000) 3,750,000 Fixed costs 3,250,000 Profit 500,000 Table 1 In the above table, units of production are 50,000. The variable cost per unit is $25. The difference between the sales revenue and variable cost is the contribution margin. As calculated above, the contribution margin is $75 per unit. The fixed costs remain constant. The profit is calculated by deducting the fixed costs from the contribution margin. In the above table, the profit calculated is $500,000 or $10 per unit.

Solution Summary: The author explains that a profit and loss statement is prepared by the company at the end of the year to calculate the net profit or net loss.

Healthcare Finance: An Introduction to Accounting and Financial Management

Healthcare Finance: An Introduction to Accounting and Financial Management

6th Edition

ISBN: 9781567937411

Author: Louis C. Gapenski, Kristin L. Reiter

Publisher: Health Administration Press

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Chapter 5 Solutions

Healthcare Finance: An Introduction to Accounting and Financial Management

Ch. 5.1 - Prob. 1.1STQ Ch. 5.1 - Prob. 1.2STQ Ch. 5.1 - Prob. 1.3STQ Ch. 5.1 - Prob. 2.1STQ Ch. 5.1 - Prob. 2.2STQ Ch. 5.1 - Prob. 2.3STQ Ch. 5.1 - Prob. 2.4STQ Ch. 5 - Prob. 1.1STQ Ch. 5 - Prob. 1.2STQ Ch. 5 - Prob. 2.1STQ

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