Assume average fixed costs

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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?

Reference no: EM13794791

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