Calculating the Contribution Margin The Mental Health program for the Community Center has just completed its fiscal year end.

Calculating the Contribution Margin

The Mental Health program for the Community Center has just completed its

fiscal year end. The program director determines that his program has revenue for the

year of $1,210,000. He believes his variable expense amounts to $205,000 and knows his

fixed expense amounts to $1,100,000.

1. Compute the contribution margin for the Community Center Mental Health

Program.

The contribution margin for the Community Center Mental Health Program is as follows:

Revenue

$1,210,000

Less Variable Cost

(205,000)

Contribution Margin

$1,005,000

Less Fixed Cost

($1,100,000)

Operating Loss

($95,000)

2. What does the result tell you about the program?

There is a loss of $95,000 in the program; therefore, the program’s contribution margin

does not cover the fixed costs.

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