Question
PRICING DECISIONS Accurate Accounting provides accounting services at an average price of $110 per hour and incurs variable costs of $60 per hour. Assume average
PRICING DECISIONS
Accurate Accounting provides accounting services at an average price of $110 per hour and incurs variable costs of $60 per hour. Assume average fixed costs are $7,200 a month. (Round your answer to the nearest whole unit.)
- What is the number of hours that must be billed to reach the breakeven point?
- If the company desires to make a profit of $3,600, how many hours must be completed?
- The company thinks it can reduce fixed costs to $6,800, but variable cost will increase to $64 per hour. The price per unit will not change. What is the new breakeven point in hours?
Thrills Amusement Park provides a variety of attractions. Thrills sells tickets at $50 per person as a one-day entrance fee. Variable costs are $28 per person, and fixed costs are $178,800 per month. Assume that Thrills reduces fixed costs from $178,800 per month to $166,500 per month.
- Compute the new breakeven point in tickets and in sales dollars.
Smith Plumbing makes a deluxe sink faucet. The company is currently producing and selling 100 faucets per month. Data are as follows:
Sales price per unit | $400 |
Variable cost per unit | $235 |
Fixed costs per month | $5,115 |
- What is the margin of safety in units?
2. What is the margin of safety in sales dollars?
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