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Ruben Ltd. is a management consulting firm specialising in pension plans. Its billing rate to clients is $120 per hour, and variable costs average $80 per hour. Fixed costs are $24,000 per month. The income tax rate is 20%. If variable costs increase by 10% and management increases its billing rate by 8%, what is the effect on the breakeven point, in billable hours?
Accounts Receivable
Funds that are due to a business from its clients for goods or services already provided but not yet compensated for.
Liquidity Crisis
A situation where an entity lacks the liquidity necessary to meet its short-term obligations, potentially leading to insolvency.
Market Value
The current price at which an asset or service can be bought or sold in a competitive marketplace.
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