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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 ($6.0 per hour) than garden maintenance ($3.0 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: Lawn Maintenance Sales $120,000 Variable expenses 48,000 Per Hour $15.0 6.0 Garden Maintenance $30,000 6,000 Per Hour $15.0 3.0 Total $150,000 54,000 Contribution margin $ 72,000 $ 9.0 $24,000 $12.0 96,000 Fixed expenses Operating income 40,320 $ 55,680 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
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