Concept: Determining contribution margin and Computing breakeven volume. In and Out Clinic's summary income statement for its most recent year follows: Revenues $20,000 Expenses $25,000 Net loss 5,000 The revenue in the income statement was obtained from 100 patients. A judgmental analysis by management of the individual expense accounts indicates that expenses can be categorized as $15,000 of fixed expenses and $10,000 of variable expenses. Revenue $20,000 Fixed Expenses $15,000 Variable Expenses $10,000 Total expenses $25,000 Profit (loss) $5,000

Questions 1.Given the Cost-Revenue relationships in the income statement, is In and Out Clinic above or below its break-even volume?

2.What is the average revenue per patient?

3.What is the average variable cost per patient?

4.What is the "contribution margin" per patient?

5. Assume that the Cost- Revenue relationships from the prior year will hold in the current year. Use the following formula for break-even volume: BE = Total fixed cost / (Unit Revenue - Unit variable cost). What is the likely Breakeven volume of patients?