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 28,000 hours next year. Health-Temp charges the hospitals and clinics $80 per hour and has variable costs of $67.20 per hour (this includes the payment to the nurse). Total fixed costs equal $345,984. 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 $79,360. $______ 4. What if Health-Temp had target operating income (profit) of $97,280? Would sales revenue be larger or smaller than the one calculated in Requirement 3? LARGER 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 28,000 hours next year. Health-Temp charges the hospitals and clinics $80 per hour and has variable costs of $67.20 per hour (this includes the payment to the nurse). Total fixed costs equal $345,984.
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 $79,360.
$______
4. What if Health-Temp had target operating income (profit) of $97,280? Would sales revenue be larger or smaller than the one calculated in Requirement 3? LARGER
By how much?
$_______
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