Exercise 18-8 (Part Level Submission) All That Blooms provides environmentally f

Question

Exercise 18-8 (Part Level Submission) All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation Advertising Insurance Weed and feed materials Direct labor Fuel s 1,400 per month $ 2,745 per month s 1,000 per month $19 per lawn $.15 per lawn $3 per lawn All That Blooms charges $ 86 per treatment for the average single-family lawn (a) Determine the company's break-even point in number of lawns serviced per month Break-even point lawns

Explanation / Answer

Total variable costs=(19+15+3)=$37

Total fixed costs=(1400+2745+1000)=$5145

Contribution margin=(sales-variable costs)

=(86-37)=$49

Hence breakeven=Contribution margin/Fixed costs

=(5145/49)=105 lawns.

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