Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $10.0 per hour for each

image text in transcribedimage text in transcribed

Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $10.0 per hour for each type of service, but lawn maintenance has higher variable costs ($4.0 per hour) than garden maintenance ($2.0 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: Sales Variable expenses Lawn Per Garden Per Maintenance Hour Maintenance Hour $ 80,000 $10.0 $ 20,000 $10.0 32,000 4.0 4,000 2.0 Total $ 100,000 36,000 Contribution margin $ 48,000 $ 6.0 $ 16,000 $ 8.0 64,000 Fixed expenses 31,360 Operating income $ 32,640 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.) Lawn Care Garden Maintenance Weighted average CM per hour 4. Calculate the overall break-even point for the company in hours. Total break-even point in 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 $73,500 if the tax rate is 30%. Sales required to achieve after-tax target profit

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

Step: 3

blur-text-image

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

Evaluating The Effectiveness On Internal Audit Departments

Authors: W. Steve Albrecht, Keith R. Howe, Dennis R. Schueler, Kevin D. Stocks

1st Edition

089413177X, 978-0894131776

More Books

Students also viewed these Accounting questions