Exercise 225 All That Blooms provides environmentally friend

Exercise 22-5 All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows $1,500 per month $1,876 per month $1,200 per month $10 per lawn Depreciation Advertising Insurance Weed and feed materials Direct labor Fuel $8 per lawn $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 O decimal places, e.g. 1,225.) Break-even point g

Solution

Working notes -1

selling price per unit

$64

less

variable cost per unit

Weed and feed materials

$10

Direct labor

$8

Fuel

$2

$20

contribution per unit

$44

Working notes -2

Profit volume ratio

variable cost / selling price

$44/$64*100

68.75

%

Working notes -2

Depreciation per month

$1,500

Advertising per month

$1,876

Insurance per month

$1,200

Fixed cost per month

$4,576

A.

Break even point (lawns)

=fixed cost / Contribution per unit

$4576/$44

$104

B.

Break even point ($)

=fixed cost / profit volume ratio

$4576/0.6875

$6,656

Working notes -1
	selling price per unit		$64
less	variable cost per unit
	Weed and feed materials	$10
	Direct labor	$8
	Fuel	$2	$20
	contribution per unit		$44
Working notes -2
	Profit volume ratio	variable cost / selling price
		$44/$64*100
		68.75	%
Working notes -2
	Depreciation per month		$1,500
	Advertising per month		$1,876
	Insurance per month		$1,200
	Fixed cost per month		$4,576
A.	Break even point (lawns)		=fixed cost / Contribution per unit
			$4576/$44
			$104
B.	Break even point ($)		=fixed cost / profit volume ratio
			$4576/0.6875
			$6,656