Cost Accounting Quiz
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A software consulting firm has monthly fixed costs of $240,000 and variable costs of $80 per billable hour. The firm typically operates at 80% of its 4,000-hour monthly capacity. A potential client offers a contract requiring 500 hours per month at $120 per hour, but this would require turning away some regular clients who pay $180 per hour. What is the minimum number of regular client hours that must be displaced to make this contract uneconomical?
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