Question

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

Depreciation		$1,500	per month
Advertising		$2,671	per month
Insurance		$1,700	per month
Weed and feed materials		$16	per lawn
Direct labor		$13	per lawn
Fuel		$3	per lawn

All That Blooms charges $89 per treatment for the average single-family lawn.

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

a. Break even point __ lawns.

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

a. Break even point __$$

Answer 1

1
Break Even Units	=	Total Fixed Cost	/	Contribution per Lawn
Break Even Units	=	5,871.00	/	57.00
Break Even Units	=	103

2
Break Even Point in $	=	Break Even Units	*	Revenue per Unit
Break Even Point	=	103	*	89.00
Break Even Point	=	9,167.00

Depreciation	1,500.00
Advertising	2,671.00
Insurance	1,700.00
Total Fixed Cost	5,871.00

Revenue	89.00
Variable Expesnes:
Weed and feed materials	16.00
Direct labor	13.00
Fuel	3.00
Contribution per Lawn	57.00

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