Exercise 22-5 All That Blooms provides environmentally friendly lawn services fo
ID: 2607163 • Letter: E
Question
Exercise 22-5 All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows $1,500 per month $1,876 per month $1,200 per month $10 per lawn Depreciation Advertising Insurance Weed and feed materials Direct labor Fuel $8 per lawn $2 per lawn All That Blooms charges $64 per treatment for the average single-family lawn. Determine the company's break-even point in number of lawns serviced per month. Break-even point lawns Determine the company's break-even point in dollars. (Round answer to O decimal places, e.g. 1,225.) Break-even point gExplanation / Answer
Working notes -1
selling price per unit
$64
less
variable cost per unit
Weed and feed materials
$10
Direct labor
$8
Fuel
$2
$20
contribution per unit
$44
Working notes -2
Profit volume ratio
variable cost / selling price
$44/$64*100
68.75
%
Working notes -2
Depreciation per month
$1,500
Advertising per month
$1,876
Insurance per month
$1,200
Fixed cost per month
$4,576
A.
Break even point (lawns)
=fixed cost / Contribution per unit
$4576/$44
$104
B.
Break even point ($)
=fixed cost / profit volume ratio
$4576/0.6875
$6,656
Working notes -1
selling price per unit
$64
less
variable cost per unit
Weed and feed materials
$10
Direct labor
$8
Fuel
$2
$20
contribution per unit
$44
Working notes -2
Profit volume ratio
variable cost / selling price
$44/$64*100
68.75
%
Working notes -2
Depreciation per month
$1,500
Advertising per month
$1,876
Insurance per month
$1,200
Fixed cost per month
$4,576
A.
Break even point (lawns)
=fixed cost / Contribution per unit
$4576/$44
$104
B.
Break even point ($)
=fixed cost / profit volume ratio
$4576/0.6875
$6,656
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