Exercise 18-8 All That Blooms provides environmentally friendly lawn services fo
ID: 2493510 • Letter: E
Question
Exercise 18-8 All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation $2,215 per month Advertising $277 per month Insurance $3,045 per month Weed and feed materials $11 per lawn Direct labor $8 per lawn Fuel $2 per lawn All That Blooms charges $70 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. (a) Break-even point lawns (b) Break-even point $
Explanation / Answer
Break even point (in units)=
fixed cost / contribution per unit
Break een point ( in Rs)=
fixed cost/contribution per unit * selling price per unit
Break even point is point where there will not be any profit or loss, the revenue recovers the fixed costs incurred and nothing more. it is neutral any sales Or units above Break even point leads to profits. here break even lawns is 110.14 lawns, so rounded of to 111 lawns , total fixed cost /contribution per unit, = 5397/49,=110.1428 lawns,
BEP in dollars = 110.1428*70 =7709.99= 7710 total fixed cost / contribution per unit * selling price per unit, or 111*70= 7770.
Break even point (in units)=
fixed cost / contribution per unit
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.