Cost volume profit applied to the service industry
A nursing home has the following annual budget:
Calculate the budgeted contribution margin ratio.

Question

Cost volume profit applied to the service industry
A nursing home has the following annual budget: 
Calculate the budgeted contribution margin ratio.

Quizplus · Accepted Answer

To calculate the budgeted contribution margin ratio, we need to first determine the total revenue and total variable expenses. From the given budget, we can see that the total revenue is $2,000,000 and the total variable expenses are $1,500,000. 
To calculate the contribution margin ratio, we use the formula: 
Contribution Margin Ratio = (Total Revenue - Total Variable Expenses) / Total Revenue 
Substituting the values, we get: 
Contribution Margin Ratio = ($2,000,000 - $1,500,000) / $2,000,000 
Contribution Margin Ratio = $500,000 / $2,000,000 
Contribution Margin Ratio = 0.25 or 25% 
Therefore, the correct answer is C.

Cost Volume Profit Applied to the Service Industry