Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clin-ics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 23,500 hours next year. Health-Temp charges the hospitals and clinics $90per hour and has variable costs of $75.60 per hour (this includes the payment to the nurse). Totalfixed costs equal $321,000.Required:1. Calculate the contribution margin per unit and the contribution margin ratio.2. Calculate the sales revenue needed to break even.3. Calculate the sales revenue needed to achieve a target profit of $100,000.4. What if Health-Temp had target operating income (profit) of $110,000? Would sales revenuebe larger or smaller than the one calculated in Requirement 3? Why? By how much?
Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clin-
ics throughout the metropolitan area. Health-Temp Company believes it will place temporary
nurses for a total of 23,500 hours next year. Health-Temp charges the hospitals and clinics $90
per hour and has variable costs of $75.60 per hour (this includes the payment to the nurse). Total
fixed costs equal $321,000.
Required:
1. Calculate the contribution margin per unit and the contribution margin ratio.
2. Calculate the sales revenue needed to break even.
3. Calculate the sales revenue needed to achieve a target profit of $100,000.
4. What if Health-Temp had target operating income (profit) of $110,000? Would sales revenue
be larger or smaller than the one calculated in Requirement 3? Why? By how much?
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