Pete’s Lawn Care is a medium- sized company with customers in three counties in northwestern Connecticut. Pete cuts grass and provides basic cleanup services for his customers, with each job taking approximately 30 minutes to complete. Pete’s costs for doing business are in the following table:

REQUIRED:

a. Complete the above table.

b. Derive a cost formula for Pete’s if he has up to 500 customers.

c. Derive a cost formula for Pete’s when he has 750 customers. Be careful here!

d. Why are these different?

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Pete's Lawn Care Services Cost Pattern Cost for 250 Customers Cost for 500 Customers Cost for 750 Customers (Variable, Fixed, Stepped, Mixed) Resource Labor $1,875 $3,750 $5,625 Mowers $2,000 $2,500 $2,500 Trucks $15,000 $15,000 $20,000 Telephones $200 $250 $300 Billing supplies $25 $50 $75 Desks $400 $400 $400 Rent on building $2,500 $2,500 $2,500 Gasoline $1,000 $2,000 $3,000 Totals Cost formula up to 500 Customers Variable Cost per Customer Plus Cost formula at 750 Customers Variable Cost per Customer Plus