Question

Question 4 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 $ 1,400 per month $ 2,745 per month $ 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 Click if you would like to Show Work for this question: Open Show Work

Answer 1

ANSWER: (a) Break-even point = 105 lawns Explanations: Service Revenue per treatment = $ 86 per treatment Variable cost per Unit = $ 19+$ 15+$3 = $ 37 per lawn Contribution per Unit = Service revenue per treatment - variable cost per unit = $ 86 - $ 37 = $ 49 per lawn Fixed cost = $ 1,400 + $ 2,745 +$ 1,000 = $5,145 Break-even points in units = Fixed cost / Cotribution per unit = $5,145 / $ 49 per lawn = 105 lawns