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.

Depreciation $ 1,500 per month

Advertising $ 1,876 per month

Insurance $ 1,200 per month

Weed and feed materials $ 10 per lawn

Direct labor $ 8 per lawn Fuel $ 2 per lawn

All That Blooms charges $ 64 per treatment for the average single-family lawn. Determine the company’s break-even point in number of lawns serviced per month. Break-even point lawns Determine the company’s break-even point in dollars. (Round answer to 0 decimal places, e.g. 1,225.)

Break-even point $

Explanation / Answer

Total variable cost=(10+8+2)=$20

Contribution margin=Sales-Variable cost

=(64-20)=$44 per lawn

Total fixed cost=(Depreciation+Advertising+Insurance)

=(1500+1876+1200)=$4576

Hence breakeven=Fixed cost/Contribution margin

=(4576/44)=104lawns

=(104*64)=$6656

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