An engineering consulting firm measures its output in a standard service hour unit, which is a function
Question:
An engineering consulting firm measures its output in a standard service hour unit, which is a function of the personnel grade levels in the professional staff. The variable cost (cv) is $69 per standard service hour. The charge-out rate [i.e., selling price (p)] is $95.56 per hour. The maximum output of the firm is 150,000 hours per year, and its fixed cost (CF) is $1,024,000 per year.
For this firm, what is the breakeven point in percentage of total capacity, and what is the number of full-time consultants assuming everyone will work for 8 hours a day?
A. | The company's breakeven point is 25.70% of total capacity and it will have 51 full-time consultants | |
B. | The company's breakeven point is 35.70% of total capacity and it will have 88 full-time consultants | |
C. | The company's breakeven point is 53.70% of total capacity and it will have 61 full-time consultants | |
D. | The company's breakeven point is 80% of total capacity and it will have 40 full-time consultants |
Financial and Managerial Accounting the basis for business decisions
ISBN: 978-0078111044
16th edition
Authors: Jan Williams, Susan Haka, Mark Bettner, Joseph Carcello