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			Commercial
Revenue	$	25	per hour	$	35	per hour
Variable expense	$	15	per hour	$	20	per hour
Fixed expense	$	500	per month	$	825	per month

Required:

1. Calculate the number of break-even hours for residential clients and commercial clients.

Break-even hours for residential clients ______________ Break-even hours for commercial clients _____________

2. Assume that James decides to focus on commercial clients and his business is operating at 120 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 _________