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Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $15.0 per hour for
Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $15.0 per hour for each type of service, but lawn maintenance has higher variable costs ($9.0 per hour) than garden maintenance ($4.5 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: Lawn Maintenance Sales $120,000 Variable expenses Contribution margin 72,000 Per Hour $15.0 9.0 Garden Maintenance $30,000 Per 9,000 Hour $15.0 4.5 Total $150,000 81,000 $ 48,000 $ 6.0 $21,000 $10.5 69,000 Fixed expenses 19,320 Operating income $ 49,680 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.) Weighted average CM per hour Lawn Garden Care Maintenance 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? Number of hours Lawn Care Garden Maintenance 6. Calculate the overall sales in dollars required to earn an after-tax profit of $80,640 if the tax rate is 30%. Sales required to achieve after-tax target profit
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