Reference no: EM132436398

Question

COST VOLUME PROFIT ANALYSIS

1. Comfort Homeless Inc, a homeless shelter, is considering extending its services and opening a new wing with qualified nurses in the facility. This additional service would be billed on an hourly rate. The shelter would bill at a rate of $18 per hour. It would employ CNA help and pay them $9 per hour. Other variable costs are anticipated to be $5.40 per hour, and annual fixed costs are expected to total $27,000.

Instructions:

a. Compute the breakeven point in billable hours.

b. Compute the breakeven point in total billings.

c. Find the new breakeven point in total billings if fixed costs should go up by $2,340

d. Using the original figures, compute the breakeven point in total billings if the billing rate decreases by $1 per hour, other variable costs decrease by $0.40 per hour, and fixed costs go down by $3,600.