Exercise 18-8 (Part Level Submission) All That Blooms provides environmentally f

Question

Exercise 18-8 (Part Level Submission)

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

Depreciation $ 1,400 per month
Advertising $ 1,707 per month
Insurance $ 1,300 per month
Weed and feed materials $ 15 per lawn
Direct labor $ 12 per lawn
Fuel $ 2 per lawn

All That Blooms charges $ 68 per treatment for the average single-family lawn.

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(a)

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

Break-even point
lawns

Determine the companys break even point in dollars

Explanation / Answer

formula for calculating Breakeven point in unit = Fixed costs / (Price per unit - Variable cost per unit)

now we have to calculate total fixed costs and total variable cost per unit

Step 1

Calculation of Fixed costs

Step 2

Calculation of Variable cost per unit

Step 3

Break-even point in numbers = $4,407 / ($68-$29)

Break-even point in numbers = 113 lawns

Break-even point in dollars = break-even point in numbers * unit rate

Break-even point in dollars = 113 * $68

Break-even point in dollars = $7,684

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