Green with Envy provides environmentally friendly lawn services for homeowners.

Question

Green with Envy provides environmentally friendly lawn services for homeowners. Its operating costs are as follows.

Depreciation $1,500 per month
Advertising $200 per month
Insurance $2,000 per month
Weed and feed materials $13 per lawn
Direct labor $12 per lawn
Fuel $2 per lawn

Green with Envy charges $60 per treatment for the average single-family lawn.

Determine the company's break-even point in (a) number of lawns serviced per month and (b) dollars. (Round answers to 0 decimal places, e.g. 125. Use rounded amount for subsequent calculations.)

Explanation / Answer

We must use the equation Units x (Sale Price - Variable Cost per Unit) - Fixed Costs = profit Sales price per lawn is $60 Variable cost per lawn = 13 + 12 + 2 = $27 Fixed cost = 1500 + 200 + 2000 = $3700 To find break even we must plug in our values as set profit = zero = (60 - 27) x Units - 3700 = 0 so units are 112.12 lawns per month In $ amount this is $6727.27 Hope this helps!

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