Share and Care International is trying to determine how many clients must be serviced in order to cover its monthly service overhead.Using the high-low method,it has determined that the variable cost per client is $800 and that the monthly fixed overhead is $28,000.
-Assuming an average fee of $1,200 per client,the breakeven point per month is
A)35 clients.
B)80 clients.
C)70 clients.
D)55 clients.

Question

Share and Care International is trying to determine how many clients must be serviced in order to cover its monthly service overhead.Using the high-low method,it has determined that the variable cost per client is $800 and that the monthly fixed overhead is $28,000. 
-Assuming an average fee of $1,200 per client,the breakeven point per month is
A)35 clients.
B)80 clients.
C)70 clients.
D)55 clients.

Quizplus · Accepted Answer

The formula to find the breakeven point is:

Breakeven Point = Fixed Costs / (Price per Unit - Variable Costs per Unit)

Substituting the values given:

Breakeven Point = 28,000 / (1,200 - 800) = 70 clients.

Therefore, the answer is C, 70 clients. This means that Share and Care International must service at least 70 clients in a month to cover its monthly service overhead.

Share and Care International Is Trying to Determine How Many