All That Blooms provides environmentally friendly lawn services for homeowners.

Question

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

All That Blooms charges $ 77 per treatment for the average single-family lawn.

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

2.

Determine the company’s break-even point in dollars. (Round answer to 0 decimal places, e.g. 1,225.)

Depreciation $ 1,500 per month Advertising $ 4,338 per month Insurance $ 1,200 per month Weed and feed materials $ 4 per lawn Direct labor $ 3 per lawn Fuel $ 1 per lawn

Explanation / Answer

Total variable cost per lawn=Weed and feed materials+Direct labor+Fuel

=(4+3+1)=$8 per lawn

Total fixed costs=Depreciation+Advertising+Insurance

=(1500+4338+1200)=$7038

Contribution margin=Sales revenue-Variable cost

=(77-8)=$69

Hence 1.Breakeven point=Fixed cost/Contribution margin

=(7038/69)=102 lawns

2.Breakeven value=(102*77)=$7854

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