Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribed

image text in transcribed

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. Revenue Variable expense Fixed expense Residential $ 120 per hour $ 72 per hour $ 15,600 per month Commercial $ 130 per hour $ 65 per hour $ 17,810 per month Required: 1. At what volume of hours per month will James be indifferent between focusing on residential versus commercial clients? ices 3. Assume that James decides to focus on commercial clients and his business is operating at 365 hours per month. Calculate the margin of safety both in dollars and as a percentage of sales. (Round percentage answer to 1 decimal place.) Margin of safety (in dollars) Margin of safety as a percentage of sales

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Frank Woods Business Accounting Volume 2

Authors: Frank Wood, Alan Sangster

10th Edition

0273693107, 978-0273693109

More Books

Students also viewed these Accounting questions