The drop down menu titles: Controllable margin, service revenue, contribution ma
ID: 2358713 • Letter: T
Question
The drop down menu titles: Controllable margin, service revenue, contribution margin, novocaine, supplies, total controllable fixed costs, total variable cost, utilities, dental assistant wages, filling materials, dentist salary, and equipment depreciation.
Dental Clinic provides both preventive and orthodontic dental services. The two owners, Chris Thao and Kim Long, operate the clinic as two separate investment centers: Preventive Services and Orthodontic Services. Each of them is in charge of one of the centers: Chris for Preventive Services and Kim for Orthodontic Services. Each month they prepare an income statement on the two centers to evaluate performance and make decisions about how to improve the operational efficiency and profitability of the clinic.
Recently, they have been concerned about the profitability of the Preventive Services operations. For several months, it has been reporting a loss. Shown below is the responsibility report for the month of May 2012.
Actual
Difference
from
Budget Service revenue
$39,400
$1,130 F Variable costs:
Filling materials
5,030
140 U Novocain
4,100
160 U Supplies
1,920
240 F Dental assistant wages
2,470
Explanation / Answer
Service revenue
$39,400 40530
$1,130
F
Variable costs:
Filling materials
5,030 5730
140
U
Novocain
4,100 4260
160
U
Supplies
1,920 1680
240
F
Dental assistant wages
2,470
–0–
Utilities
490 540
40
U
Total variable costs
14,010 15110
100
U
Fixed costs:
Allocated portion of receptionist’s salary
3,010 3290
280
U
Dentist salary
10,930 115 1 0
580
U
Equipment depreciation
6,130
–0–
Allocated portion of building depreciation
15,030 16240
1,210
U
Total fixed costs
35,100
2,070
U
Operating income (loss)
$(9,710 107 50
)
$1,040
U
Service revenue
$39,400 40530
$1,130
F
Variable costs:
Filling materials
5,030 5730
140
U
Novocain
4,100 4260
160
U
Supplies
1,920 1680
240
F
Dental assistant wages
2,470
–0–
Utilities
490 540
40
U
Total variable costs
14,010 15110
100
U
Fixed costs:
Allocated portion of receptionist’s salary
3,010 3290
280
U
Dentist salary
10,930 115 1 0
580
U
Equipment depreciation
6,130
–0–
Allocated portion of building depreciation
15,030 16240
1,210
U
Total fixed costs
35,100
2,070
U
Operating income (loss)
$(9,710 107 50
)
$1,040
U
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