Plentygood company provides two levels of advising services


Question - Plentygood Company provides two levels of advising services. The costs below are computed at the average monthly volume of 5,000 advising hours for each type of service.


Basic

Deluxe

Revenues per hour

275

590

Variable cost per hour

115

180

Common fixed costs per hour

42

276

1. What is the contribution margin per hour for the Basic service?

2. What is the contribution margin per hour for the Deluxe service?

3. At this level of activity, what is the net income per hour for the Basic service?

4. At this level of activity, what is the net income per hour for the Deluxe service?

5. Which service should Plentygood try to promote if more opportunity exists in both areas? Type Deluxe or Basic

6. By how much will income change if 100 additional Deluxe advising hours are generated next month?

7. If Basic advising hours double next month, what will be the net income per hour for the Basic service?

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Accounting Basics: Plentygood company provides two levels of advising services
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