Please be sure to clearly include all steps. EXERCISE 4-7 Indifference Analysis [LO8@];...
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Please be sure to clearly include all steps. EXERCISE 4-7 Indifference Analysis [LO8@]; Break-Even Analysis [LO5]; Margin of Safety [LO7 Q1 James House is planning on starting a cleaning services business but has not decided whether he should focus on residential clients or commercial clients. His estimates of revenue, variable expenses, and fixed expenses are shown below. Page 121 Residential Commercial Revenue $25 per hour $35 per hour Variable expense $15 per hour $20 per hour Fixed expense $500 per month $825 per month Required: 1. At what volume of hours per month will James be indifferent between focusing on residential versus commercial clients? 2. Calculate the number of break-even hours for residential clients and commercial clients. 3. Assume that James decides to focus on commercial clients and his business is operating at 120 hours per month. Calculate the margin of safety both in dollars and as a percentage of sales
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