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Evergreen Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $20.0 per hour for each type
Evergreen Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $20.0 per hour for each type of service, but lawn maintenance has higher variable costs ($12.0 per hour) than garden maintenance ($6.0 per hour) because of fuel expenses incurred to operate lawn-mowing equipment. All employees are paid a fixed monthly salary. A contribution format income statement for a recent month for the two services appears below. During the month, 8,000 hours of lawn maintenance services and 2,000 hours of garden maintenance were provided: Per Lawn Maintenance $160,000 96,000 $ 64,000 Per Hour $20.0 12.0 Sales Garden Maintenance $40,000 12,000 $28,000 Hour $20.0 6.0 Total $200,000 108,000 Variable expenses Contribution margin $ 8.0 $ 14.0 Fixed expenses 92,000 51,520 $ 40,480 Operating income Required: 1. Compute the overall CM ratio for the company. 2. Compute the overall break-even point for the company in sales dollars. 3. Compute the weighted average CM per hour for the company. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 4. Calculate the overall break-even point for the company in hours. 5. At the overall break-even point in total hours, how many hours of each service must be provided for the company to break-even? 6. Calculate the overall sales in dollars required to earn an after-tax profit of $53,760 if the tax rate is 30%
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