# Question & Answer: Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The comp…..

Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers \$16 per hour for each type of service, but lawn maintenance has higher variable costs (\$7 per hour) than garden maintenance (\$5 per hour) because of fuel expenses incurred to operate lawn-mowing equipment. All employees are paid a fixed monthly salary. A contribution format income statement for a recent month for the two services appears below. During the month, 7,000 hours of lawn maintenance services and 3,000 hours of garden maintenance were provided:

 Lawn maintenance Per hour Garden maintenance Per hour Total Sales 112,000 16 48,000 16 160,000 Variable expenses 49,000 7 15,000 5 64,000 Contribution margin 63,000 9 33,000 11 96,000 Fixed expenses 64,800 Operating income 31,200

5.

Don't use plagiarized sources. Get Your Custom Essay on
Question & Answer: Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The comp…..
GET AN ESSAY WRITTEN FOR YOU FROM AS LOW AS \$13/PAGE
At the overall break-even point in total hours, how many hours of each service must be provided for the company to break-even?

6.

 Calculate the overall sales in dollars required to earn an after-tax profit of \$42,000 if the tax rate is 30%.

## Expert Answer

 Lawn maintenance Per hour Garden maintenance Per hour Total Sales 1,12,000 16 48,000 16 1,60,000 Variable expenses 49,000 7 15,000 5 64,000 Contribution margin 63,000 9 33,000 11 96,000 Fixed expenses 64,800 Operating income 31,200 Lawn maintenance Garden maintenance Total Service Provided 7000 3000 10000 Weights 70% 30% Contribution Margin 9 11 Weighted Average Contribution Margin 6.3 3.3 9.6 Part 1 Total Fixed Expenses 64,800 Weighted Average Contribution Margin 9.6 Overall Break Even Point 6750 (Total Fixed Expense/Weighted Average Contribution) Part 2 Profit After Tax 42000 Add: Tax Expense@30% 18000 Profit Before Tax 60000 Add: Fixed Expenses 64,800 Desired Contribution Margin 1,24,800 Weighted Average Contribution Margin 9.6 Total Service Hours to be worked 13000 (Desired Contribution Margin/Weighted Average Contribution) Sales Price for every Category 16 Total Sales in Dollars 208000