Nancy’s Nursery provides and maintains live plants in office buildings. The company’s 120 customers are charged...
Nancy’s Nursery provides and maintains live plants in office buildings. The company’s 120 customers are charged $90 per month for this service, which includes weekly watering visits. The variable cost to service a customer’s location is $22 per month. The company incurs $2,000 each month to maintain its equipment and service vans and $3,000 each month in salaries. Nancy pays a CPA firm $5 per customer for accounting services.
What is the expected monthly operating income if 10 customers are added?
Homework Answers
|
Income Statement |
|
|
Revenue [(120 Customer + 10 Customer) x $90] |
$11,700 |
|
Less: Variable Costs [(120 Customer + 10 Customer) x ($22 + $5)] |
($3,510) |
|
Contribution Margin |
$8,190 |
|
Less: Fixed Costs ($2,000 + $3,000) |
($5,000) |
|
Operating Income |
$3,190 |
Therefore, the Expected monthly operating income of Nancy’s Nursery would be $3,190”
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