Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Andrew Sinclair operates a lawn care business. He offers customers a choice of two services. The first service, basic lawn care, includes mowing and trimming

image text in transcribedimage text in transcribed

Andrew Sinclair operates a lawn care business. He offers customers a choice of two services. The first service, basic lawn care, includes mowing and trimming of all lawn areas. Andrew bills these customers $45 per hour, and his variable cost for providing this service is $33 per hour. Andrew also offers deluxe lawn care services, which includes flower bed maintenance in addition to basic lawn care. He bills his customers $60 per hour for this service, and his variable cost for providing this service is $26 per hour. Andrew currently spends 1 hour of his time providing deluxe lawn care services for every 5 hours of basic lawn care services. Andrew also incurs $21,620 in fixed costs per year running his business. Andrew believes that with a little persuasion, he could convert many of his basic lawn care customers to the deluxe service. If he is able to convert enough customers so that he spends an equal amount of time providing basic and deluxe services, how many hours will he need to work to break even? (Use contribution margin per hour to calculate the answer.) Deluxe lawn care hours Basic lawn care hours eTextbook and Media Assistance Used eTextbook

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: kieso, weygandt and warfield.

IFRS Edition

978-1118443965, 1118800532, 9781118800539, 978-0470873991

More Books

Students also viewed these Accounting questions

Question

What are the transfer modes supported by HDLC? Describe each.

Answered: 1 week ago

Question

When is it appropriate to use a root cause analysis

Answered: 1 week ago

Question

What do you think of the MBO program developed by Drucker?

Answered: 1 week ago