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Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $25.0 per hour for
Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $25.0 per hour for each type of service, but lawn maintenance has higher variable costs ($15.0 per hour) than garden maintenance ($7.5 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 Per Garden Per Maintenance Hour Maintenance Hour Total $ 200,000 $25.0 $ 50,000 $25.0 $ 250,000 120,000 15.0 15,000 7.5 135,000 Sales Variable expenses Contribution margin $ 80,000 $10.0 $ 35,000 $17.5 115,000 Fixed expenses 56,350 Operating income $ 58,650 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 Care Garden 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 Garden Lawn Care Maintenance
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