Exercise 4-7 Break-Even Analysis [LO5]; Margin of Safety [LO7] 1 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. Revenue Variable expense Fixed expense Residential $ 120 per hour $ 72 per hour $15,600 per month Required: 1. 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 Commercial 130 per hour $ $ 65 per hour $17,810 per month. Margin of safety (in dollars) Margin of safety as a percentage of sales hours hours 2. 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.) %
Exercise 4-7 Break-Even Analysis [LO5]; Margin of Safety [LO7] 1 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. Revenue Variable expense Fixed expense Residential $ 120 per hour $ 72 per hour $15,600 per month Required: 1. 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 Commercial 130 per hour $ $ 65 per hour $17,810 per month. Margin of safety (in dollars) Margin of safety as a percentage of sales hours hours 2. 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.) %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Please do not give solution in image format thanku
![Exercise 4-7 Break-Even Analysis [LO5]; Margin of Safety [LO7]
1
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.
Revenue
Variable expense
Fixed expense
Residential
$ 120 per hour
$ 72 per hour
$15,600 per month
Required:
1. 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
Commercial
$ 130 per hour
$
65 per hour
$17,810 per month
Margin of safety (in dollars)
Margin of safety as a percentage of sales
hours
hours
2. 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.)
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fff75db39-6bdc-47f9-9a70-884f2ed536ea%2F548db718-095f-4f71-b4e8-0bbe0d129244%2Ff3okeq_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Exercise 4-7 Break-Even Analysis [LO5]; Margin of Safety [LO7]
1
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.
Revenue
Variable expense
Fixed expense
Residential
$ 120 per hour
$ 72 per hour
$15,600 per month
Required:
1. 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
Commercial
$ 130 per hour
$
65 per hour
$17,810 per month
Margin of safety (in dollars)
Margin of safety as a percentage of sales
hours
hours
2. 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.)
%
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 4 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education