Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan

Question:

Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 27,000 hours next year. Health-Temp charges the hospitals and clinics $130 per hour and has variable costs of $109.20 per hour (this includes the payment to the nurse). Total fixed costs equal $547,040.
Required:
1. Calculate the per unit and the ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places.
per unit $
ratio
2. Calculate the sales revenue needed to break even.
3. Calculate the sales revenue needed to achieve a target profit of $128,960.
4. What if Health-Temp had target operating income (profit) of $158,080? Would sales revenue be larger or smaller than the one calculated in Requirement 3?
- Larger OR Smaller?
By how much?
Contribution Margin
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...