SHARE Is Trying to Determine How Many Clients Must Be

question 120

Multiple Choice

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 $1,400 per client and a targeted profit of $26,000, the number of clients to be serviced is

• A) 80 clients.
• B) 120 clients.
• C) 47 clients.
• D) 90 clients.

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Definitions:

Salvage Value

The predicted end-of-life value of an asset once its period of usability concludes.

Discount Rate

The specified rate used within discounted cash flow evaluations to determine what future cash flows amount to in present-day currency.

Small Used Aircraft

Pre-owned, smaller-sized aircraft, typically defined by their lighter weight and capacity compared to larger commercial planes.

Intangible Benefit

Non-quantifiable advantages that cannot be measured in monetary terms, such as brand recognition or employee satisfaction.