Question

Pauley Company provides home health care. Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care. What is the variable cost ratio?

A)50%
B)60%
C)40%
D)33%
E)67%

Answer 1

The correct answer is B.

Step-by-step explanation:

Giving the following information:

Pauley charges $35/hour for professional care. Variable costs are $21/hour and fixed costs are $78,000. Next year, Pauley expects to charge out 12,000 hours of home health care.

Variable cost ratio= unitary variable cost/ selling price= 21/35= 0.6= 60%