James House is planning on starting a cleaning services business but has not decided whether he should focus on residential clients or commercial clients. His estimates of revenue, variable expenses, and fixed expenses are shown below.

Required

1. Calculate the number of break-even hours for residential clients and commercial clients.
2. Assume that James decides to focus on commercial clients and his business is operating at 120 hours per month. Calculate the margin of safety both in dollars and as a percentage of sales.

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Revenue... Variable expense.. Fixed expense. Residential $25 per hour $15 per hour $500 per month Commercial $35 per hour $20 per hour $825 per month