Question
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
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?
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