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Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $14.0 per hour for each
Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $14.0 per hour for each type of service, but lawn maintenance has higher variable costs ($8.4 per hour) than garden maintenance ($4.2 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: Sales Variable expenses Lawn Per Garden Per Maintenance Hour Maintenance Hour Total $ 112,000 $14.0 $ 28,000 $14.0 $ 140,000 67,200 8.4 8,400 4.2 75,600 Contribution margin $ 44,800 $ 5.6 $ 19,600 $ 9.B 64,400 Fixed expenses 22,540 Operating income $ 41,860 Required: 1. Compute the overall CM ratio for the company. Overall contribution margin ratio % 2. Compute the overall break-even point for the company in sales dollars. Overall break-even point 3. Compute the weighted-average CM per hour for the company. (Do not round intermediate calculations. Round your answers to 2 decimal places.) 3. Compute the weighted average CM per hour for the company. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Lawn Care Garden Maintenance Weighted average CM per hour 4. Calculate the overall break-even point for the company in hours. break-even point hours 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? Lawn Care Garden Maintenance Number of hours 6. Calculate the overall sales in dollars required to earn an after-tax profit of $67,200 if the tax rate is 30%. Sales required to achieve after-tax target profit
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