E5.8 PAGES 5-36

Prepare a memo to Marty Moser concerning the assumptions that underlie CVP analysis.

E5.8 (LO 3, 4), AP All That Blooms provides environmentally friendly lawn services for homeowners. Its operating costs are as follows.

Compute break-even point in units and dollars.

Depreciation $1,400 per month

Advertising $200 per month

Insurance $2,000 per month

Weed and feed materials $12 per lawn

Direct labor $10 per lawn

Fuel $2 per lawn

All That Blooms charges $60 per treatment for the average single-family lawn.

Instructions : Determine the company's break-even point in (a) number of lawns serviced per month and (b) dollars.