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	$	30	per hour	$	40	per hour
Variable expense	$	18	per hour	$	20	per hour
Fixed expense	$	750	per month	$	1,390	per month

Required:

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

Number of hours=

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

break-even hours for residential clients=

break-even hours for commercial clients=

3. Assume that James decides to focus on commercial clients and his business is operating at 125 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=