Acc350 Managerial Accounting: P21-63 Davis Consulting provides consulting service
Acc350 Managerial Accounting P21-63 Computing breakeven sales and sales needed to earn a target profit; performing sensitivity analysis This problem continues the Davis Consulting, Inc. situation from Problem P19-40 of Chapter 19. 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?