a 220 b Determine the companys breakeven point in dollars Ro

(a)

220

(b)

Determine the company’s break-even point in dollars. (Round answer to 0 decimal places, e.g. 1,225.)

Bramble provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation $2,600 per month Advertising $200 per month Insurance $4,240 per month Weed and feed materials $15 per lawn Direct labor $30 per lawn Fuel $3 per lawn Bramble charges $80 per treatment for the average single-family lawn.

Solution

Total fixed cost=(Depreciation+Advertising+Insurance)

=(2600+200+4240)=$7040

Total variable cost=(Weed and feed materials+Direct labor+Fuel)

=(15+30+3)=$48 perlawn

Contribution margin=Service revenue-Variable cost

=(80-48)=$32 per lawn

a.Breakeven point=Fixed cost/Contribution margin

=(7040/32)=220lawns

b.Breakeven point=(220*80)=$17600.