Break-Even Sales: Sales for Target Profit

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 26,000 hours next year. Health-Temp charges the hospitals and clinics $130 per hour and has variable costs of $107.90 per hour (this includes the payment to the nurse). Total fixed costs equal $552,721.

Required:

1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places.

Contribution margin per unit	$
Contribution margin ratio

2. Calculate the sales revenue needed to break even. $

3. Calculate the sales revenue needed to achieve a target profit of $137,020. $

4. What if Health-Temp had target operating income (profit) of $167,960? Would sales revenue be larger or smaller than the one calculated in Requirement 3?

Break-Even Sales: Sales for Target Profit

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 26,000 hours next year. Health-Temp charges the hospitals and clinics $130 per hour and has variable costs of $107.90 per hour (this includes the payment to the nurse). Total fixed costs equal $552,721.

Required:

1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places.

Contribution margin per unit	$
Contribution margin ratio

2. Calculate the sales revenue needed to break even. $

3. Calculate the sales revenue needed to achieve a target profit of $137,020. $

4. What if Health-Temp had target operating income (profit) of $167,960? Would sales revenue be larger or smaller than the one calculated in Requirement 3?

Break-Even Sales: Sales for Target Profit

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 26,000 hours next year. Health-Temp charges the hospitals and clinics $130 per hour and has variable costs of $107.90 per hour (this includes the payment to the nurse). Total fixed costs equal $552,721.

Required:

1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places.

Contribution margin per unit	$
Contribution margin ratio

2. Calculate the sales revenue needed to break even. $

3. Calculate the sales revenue needed to achieve a target profit of $137,020. $

4. What if Health-Temp had target operating income (profit) of $167,960? Would sales revenue be larger or smaller than the one calculated in Requirement 3? (smaller or larger?)

By how much? $

Break-Even Sales: Sales for Target Profit 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 26,000 hours next year. Health-Temp charges the hospitals and clinics $130 per hour and has variable costs of $107.90 per hour (this includes the payment to the nurse). Total fixed costs equal $552,721. Required: 1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places Contribution margin per unit Contribution margin ratio 2. Calculate the sales revenue needed to break even. 3. Calculate the sales revenue needed to achieve a target profit of $137,020. 4. What if Health-Temp had target operating income (profit) of $167,960? Would sales revenue be larger or smaller than the one calculated in Requirement 3? By how much