Question & Answer: ly lawn services for homeowners. Its operating costs are as follows…..

Exercise 5-8 (Part Level Submission)

All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows.

Depreciation $ 1,400 per month
Advertising $ 970 per month
Insurance $ 2,000 per month
Weed and feed materials $ 15 per lawn
Direct labor $ 12 per lawn
Fuel $ 3 per lawn

All That Blooms charges $ 68 per treatment for the average single-family lawn.

Question & Answer: ly lawn services for homeowners. Its operating costs are as follows..... 1
Question & Answer: ly lawn services for homeowners. Its operating costs are as follows..... 1
Question & Answer: ly lawn services for homeowners. Its operating costs are as follows..... 1
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Question & Answer: ly lawn services for homeowners. Its operating costs are as follows..... 1

Determine the company’s break-even point in number of lawns serviced per month.

Break-even point ______ Entry field with incorrect answer now contains modified data lawns

Expert Answer

 

Total variable costs=(Weed and feed materials+direct labor+Fuel charges)

= ($15+$12+$3)=$30/lawn

Hence contribution margin=(Selling price-Variable costs)

($68-$30)=$38/lawn

Total fixed costs=(Depreciation+Advertising+Insurance charges)

=($1400+$970+$2000)=$4370.

Hence breakeven point=Fixed cost/contribution margin

=$4370/$38

=115 lawns.

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