Crane Horticulture provides and maintains live plants in office buildings. The companys 862 customers are charged $ 35 per month for this service, which includes weekly watering visits. The variable cost to service a customers location is $ 19 per month. The company incurs $ 2,028 each month to maintain its fleet of four service vans and $ 3,358 each month in salaries. Crane pays a bookkeeping service $ 2 per customer each month to handle all invoicing and accounting functions.

a)Prepare Cranes contribution format income statement for the month.

			Per Unit
Sales Revenue		$	$
Variable Expenses	-	-	-
Service Expense	$		$
Bookkeeping Expense		-
Total Variable Expenses	-
Contribution Margin	-		$
Fixed Expenses	-	-	-
Vans Expenses		-	-
Salaries Expense		-	-
Total Fixed Expense	-		-
Operating Income	-		-

b) What is the expected monthly operating income if 224 customers are added? Operating Income $

c)Mr. Crane is exploring options to reduce the annual bookkeeping costs.

Option 1:	Renegotiate the current contract with the bookkeeping service to pay a flat fee of $ 10,491 per year plus $ 1 per customer per month.
Option 2:	Hire a part-time bookkeeper for $ 19,298 per year to handle the invoicing and simple accounting. He would need to pay $ 5,600 per year to have taxes and year-end financial statements prepared.

Compare the current bookkeeping cost with the two options at customer levels of 862, 1,873, and 1,972.

	862	1873	1972
Current Cost	$	$	$
Option 1	$	$	$
Option 2	$	$	$