Special-Order Decision, Services, Qualitative Aspects Jason Rogers works full-time for UPS and runs a lawn-mowing service part-time after work during the warm months of April through October. Jason has four men working with him, each of whom is paid $7.00 per lawn mowing. Jason has 29 residential customers who contract with him for once-weekly lawn mowing during the months of May through September, and twice-per-month mowings during April and October. On average, Jason charges $38 per lawn mowed. Recently, LStar Property Management Services asked Jason to mow the lawn at each of its 29 rental houses every two weeks during the months of May through September. LStar has offered to pay $29 per lawn mowing, and would forego the lawn edging that normally takes Jason’s team about half of its regular mowing time. If Jason accepts the job, he can assign a three-man team to mow the rental house yards, and will have to buy an additional power lawn mower for about $345 used. Fuel to run the additional mower will be about $0.40 per yard.
1. If Jason accepts the special order, by how
much will his income increase or decrease?
Increase by $
Answer :-
Working note :
Total number of lawns for LStar Property Management Services
= No. of rental houses * 2 weeks * No. of months
= 29 rental houses * 2 weeks * 5 months = 290 lawns
Calculation of increase in income if Jason accepts the special order.
| Particular | Amount. |
| Revenue ( 290 lawns * $29 ) | $8,410 |
| Less : Payment of three-man team ( 290 lawns * 3 men * $7 ) | $6,090 |
| Less : Purchase of additional power lawn mower | $345 |
| Less : Fuel cost of to run the additional mower ( 290 lawns * $0.40) | $116 |
| Increase in income | $1,859 |
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