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.

• Residential CommercialRevenue$120per hour$130per hourVariable expense$72per hour$65per hourFixed expense$15,600per month$17,810per month

Required:

1.At what volume of hours per month will James be indifferent between focusing on residential versus commercial clients?

2.Calculate the number of break-even hours for residential clients and commercial clients.(Round your answers to 1 decimal place.)

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.)