FOR THE FILL IN THE BLANK EQUATION: Contrubution margin per hour Contribution ma
ID: 2463718 • Letter: F
Question
FOR THE FILL IN THE BLANK EQUATION:
Contrubution margin per hour
Contribution margin ratio
fixed costs
Hourly rate
Target profit
Variable costs
Daniels Consulting provides consulting service at an average price of $120 per hour and incurs variable cost of $60 per hour. Assume average fixed costs are $3,900 a month. Requirements 1. What is the number of hours that must be billed to reach the breakeven point? 2. If Daniels desires to make a profit of $4500, how many consulting hours must be completed? 3. Daniels thinks it can reduce fixed cost to $3,190 per month, but variable cost will increase to $62 per hourWhat is the new breakeven point in hours? Requirement 1. What is the number of hours that must be billed to reach the breakeven point? Start by selecting the formula and entering the amounts to compute the breakeven point in hours. (Complete all answer boxes. Enter a "o" for any zero balances.) = Required hours billed Requirement 2. If Daniels desires to make a profit of $4,500, how many hours must be billed? Daniels must bill D hours to earn a profit of $4,500. Requirement 3. Daniels thinks it can reduce fixed cost to $3,190 per month, but variable cost will increase to $62 per hour. What is the new breakeven point in hours? Daniels must bin hours to reach breakeven point when fixed costs are $3,190 and variable costs are $62 per hour.Explanation / Answer
Requirement 1.
Fixed costs +Target Profit)/CM in Units = Required Hours billed
Fixed cost = $3900
Contribution margin = $120-$60 = $60
Number of hour required to rech BEP = $3900 + 0 / $60 = 65 Hours
Requirement 2.
Number of hour required to earn targeted proit = Fixed costs +Target Profit)/CM in Units
= $3900 +$4,500 / $60 = 140 Hours
Requirement 3..
IF fixed cost is reduces to $3190 and VC increases to $62 , CM will change to $58 ($120-62)
Therefore the new BEP hours will be
= $3190 + 0 / $58 = 55 Hours
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