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.

Required:

1. At what volume of hours per month wi ll James be indifferent between focusing on residential versus commercial clients?

2. Calculate the number of break-even hours for residential clients and commercial clients.

3. Assume that James decides to focus on commercial clients and his business is operating at 120 hours per month. Calculate the margin of safety bod1 in dollars and as a percentage of sales.

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Residential Commercial $25 per hour $15 per hour $500 per month $825 per month $35 per hour $20 per hour Revenue. .. Variable expense. Fixed expense