Health-T

emp Company is a placement agency for temporary nurses. It serves

hospitals and clinics throughout the metropolitan area. Health-T

emp Company

believes it will place temporary nurses for a total of 23,500 hours next year

.

Health-T

emp charges the hospitals and clinics $90 per hour and has variable

costs of $75.60 per hour (this includes the payment to the nurse). T

otal fixed

costs equal $321,000

Calculate the contribution margin per unit and the contribution margin ratio.

2

.

Calculate the sales revenue needed to break even.

3

.

Calculate the sales revenue needed to achieve a target profit of $100,000.

4

.

What if

Health-T

emp had target operating income (profit) of $1

10,000? W

ould

sales revenue be larger or smaller than the one calculated in Requirement 3?

Why? By how much?