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Luce & Morgan, a law firm in downtown Jefferson City, is considering opening a legal clinic for middle- and low-income clients. The clinic would bill at a rate of $18 per hour. It would employ law students as paraprofessional help and pay them $9 per hour. Other variable costs are anticipated to be $5.40 per hour, and annual fixed costs are expected to total $27,000.

1. Compute breakeven point in billable hours?

2. Compute the breakeven point in total billings?

3. Find the new breakeven point in total billings if fixed costs should go up by $2,340?

4. Using the original figures, compute the breakeven point in total billings if the billing rate decreases by $1 per hour, variable costs decrease by $0.40 per hour, and fixed costs go down by $3,600?

Liam Smith 08-Jun-2018
Answer: (Solved)
Liam Smith
1. Breakeven point where costs equal revenues 18H = 27000 + 14.4H 18H - 14.4H = 27000 3.6H = 27000 H = 27000/3.6 H = 7500 In any given year, they must work 7500 billable hours to break even. One person works about 7 hours per day, 5 days a ...
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