Question

Carla Vista provides environmentally friendly lawn services for homeowners. Its operating costs are as follows.

Depreciation		$1,500	per month
Advertising		$200	per month
Insurance		$1,660	per month
Weed and feed materials		$22	per lawn
Direct labor		$8	per lawn
Fuel		$2	per lawn

Carla Vista 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

Type your answer here

lawns

Determine the company’s break-even point in dollars.

Break-even point

$Type your answer here

Answer 1

	Selling price per lawn					64
	less:Variable cost per lawn
	Weed and feed materials				22
	Direct labor				8
	Fuel				2	32
	Contribution per lawn					32
	Fixed cost
	Depreciation				1,500
	Advertising				200
	insurance				1,660
	total fixed cost				3,360
	BEP =	Fixed cost/contribution per lawn
		3,360/32
		105
	BEP(dollars)=		105*64
			6720