Question

This problem continues the Davis Consulting, Inc. situation from Problem. Davis Consulting provides consulting service at an average price of $ 175 per hour and incurs variable cost of $ 100 per hour. Assume average fixed costs are $ 5,250 a month.

Requirements
1. What is the number of hours that must be billed to reach the breakeven point?
2. If Davis desires to make a profit of $ 3,000, how many consulting hours must be completed?
3. Davis thinks it can reduce fixed cost to $ 3,990 per month, but variable cost will increase to $ 105 per hour. What is the new breakeven point in hours?



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  • CreatedJanuary 16, 2015
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