Green Acres Company provides home health care. Green Acres charges $35 per hour for professional care. Variable casts are $21 per hour and fixed costs are $78,000. Next year, Green Acres expects to charge out 12,000 hours of home health care.
-Refer to the Figure.What is the break-even point in sales dollars?

Question

Quizplus · Accepted Answer

The break-even point in sales dollars can be calculated using the formula: Break-even point = Fixed Costs / (1 - (Variable Costs / Sales Price per Unit)). Here, Fixed Costs = $78,000, Variable Costs per hour = $21, and Sales Price per hour = $35. Thus, Break-even point = $78,000 / (1 - ($21 / $35)) = $78,000 / (1 - 0.6) = $78,000 / 0.4 = $195,000.

Green Acres Company Provides Home Health Care