Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 22,500 hours next year. Health-Temp charges the hospitals and clinics $120 per hour and has variable costs of $97.20 per hour (this includes the payment to the nurse). Total fixed costs equal $494,076. Required: 1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places. Contribution margin per unit $____ Contribution margin ratio ______ 2. Calculate the sales revenue needed to break even. $_____ 3. Calculate the sales revenue needed to achieve a target profit of $141,360. $______ 4. What if Health-Temp had target operating income (profit) of $173,280? Would sales revenue be larger or smaller than the one calculated in Requirement 3? By how much? $______
Health-Temp Company is a placement agency for temporary nurses. It serves hospitals and clinics throughout the metropolitan area. Health-Temp Company believes it will place temporary nurses for a total of 22,500 hours next year. Health-Temp charges the hospitals and clinics $120 per hour and has variable costs of $97.20 per hour (this includes the payment to the nurse). Total fixed costs equal $494,076.
Required:
1. Calculate the contribution margin per unit and the contribution margin ratio (express the ratio as a decimal rather than a percentage). If required, round your answers to two decimal places.
| Contribution margin per unit | $____ |
| Contribution margin ratio | ______ |
2. Calculate the sales revenue needed to break even.
$_____
3. Calculate the sales revenue needed to achieve a target profit of $141,360.
$______
4. What if Health-Temp had target operating income (profit) of $173,280? Would sales revenue be larger or smaller than the one calculated in Requirement 3?
By how much?
$______
Step by step
Solved in 5 steps with 2 images
