Question

View rondres Current Attempt in Progress Oriole provides environmentally friendly lawn services for homeowners. Its operating costs are as follows. Depreciation Advertising Insurance Weed and feed materials Direct labor Fuel $1,500 per month $400 per month $3,560 per month $24 per lawn $3 per lawn $1 per lawn Oriole charges $80 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 Attempts:0 of 7 used hp Mort se delete * * ** + backspace

Answer 1

Variable cost per unit = Weed and feed material + Direct labor + Fuel

= 24 + 3 + 1

= $28

Selling price per unit = $80

Total fixed cost = Depreciation + Advertising + Insurance

= 1,500 + 400 + 3,560

= $5,460

Contribution margin per unit = Selling price per unit - Variable cost per unit

= 80 - 28

= $52

Break even point = Total fixed cost/Contribution margin per unit

= 5,460/52

= 105 lawns

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