SHARE 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

Quizplus · Accepted Answer

Breakeven point = Fixed costs / (Average revenue per client - Variable cost per client)

= 28,000 / (1,200 - 800)

= 28,000 / 400

= 70

Therefore, SHARE needs to service 70 clients to cover its monthly service overhead.

SHARE Is Trying to Determine How Many Clients Must Be