Exercise 11-8 Sarasota provides environmentally friendly lawn services for homeo
ID: 2517872 • Letter: E
Question
Exercise 11-8 Sarasota provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. CALCULATOR ESSAGE YINSTRUC Depreciation Advertising Insurance Weed and feed materials Direct labor Fuel $1,800 per month $400 per month $4,450 per month $14 per lawn $18 per lawn $3 per lawn Sarasota charges $70 per treatment for the average single-family lawn. Determine the company's break-even point in number of lawns serviced per month. lawns Break-even point VIDEO: APPLIED SKILLS VIDEO: SIMILAR PROBLEM LINK TO TEXT LINK TO TEXT Determine the company's break-even point in dollars. (Round answer to O decimal places, e.g. 1,225.) VIDEO' APPLIED SKrus VIDEO: SIMILAR PROBLEM Break-even point s LINK TO TEXT LINK TO TEXT l Sens. Inc. All Rights Reserved. A Division of John Wiley &Sons.Jos;
Explanation / Answer
Answer
Working
Total Fixed Costs
Depreciation
$ 1,800.00
Advertising
$ 400.00
Insurance
$ 4,450.00
Total Fixed Cost
$ 6,650.00
Total Variable cost per Lawn
Weed
$ 14.00
Direct labor
$ 18.00
Fuel
$ 3.00
Total variable cost per unit
$ 35.00
Service charges per Lawn
$ 70.00
(-) variable cost per lawn
$ 25.00
Contribution margin per lawn
$ 45.00
Answer 1 & 2
A
Total Fixed Cost
$ 6,650.00
B
Contribution margin per lawn
$ 35.00
C=A/B
Break Even point in Lawns
190
D
Service charges per Lawn
$ 70.00
E=C x D
Break Even point in Dollars
$ 13,300.00
Answer 1
Unit Selling price
$ 544.00
(-) Unit Variable cost
$ 381.00
Unit Contribution margin
$ 163.00
Answer 2
Total
Per unit
Sales Revenue
$ 4,43,904.00
$ 544.00
(-) variable cost
$ 3,10,896.00
$ 381.00
Contribution margin
$ 1,33,008.00
$ 163.00
(-) Fixed Cost
$ 73,350.00
Net Income
$ 59,658.00
Total Fixed Costs
Depreciation
$ 1,800.00
Advertising
$ 400.00
Insurance
$ 4,450.00
Total Fixed Cost
$ 6,650.00
Total Variable cost per Lawn
Weed
$ 14.00
Direct labor
$ 18.00
Fuel
$ 3.00
Total variable cost per unit
$ 35.00
Service charges per Lawn
$ 70.00
(-) variable cost per lawn
$ 25.00
Contribution margin per lawn
$ 45.00
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