All That Blooms provides environmentally friendly lawn services for homeowners.

Question

All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows.

A.) All That Blooms charges $67 per treatment for the average single-family lawn.

Determine the company’s break-even point in number of lawns serviced per month.

B.) Determine the company’s break-even point in dollars. (Round answer to 0 decimal places, e.g. 1,225.)

Depreciation $1,500 per month Advertising $1,595 per month Insurance $1,900 per month Weed and feed materials $11 per lawn Direct labor $9 per lawn Fuel $2 per lawn

Explanation / Answer

Fixed cost per month = 1500 +1595 + 1900 = 4995

Variable cost per lawn = 11 +9 +2 =$ 22 per lawn

Contribution per lawn = 67 - 22 =$ 45

CM ratio = 45/67 = .67164

A)BEP = fixed cost /contribution per lawn

              = 4995 /45

              = 111 lawn

B)BEP = Fixed cost/cm ratio

            = 4995 /.67164

              = $ 7437

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