Answered step by step
Verified Expert Solution
Question
1 Approved Answer
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
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 t month, 8,000 hours of lawn maintenance services and 2,000 hours of garden maintenance were provided: Lawn Maintenance $120,000 48,000 $ 72,000 Per Hour $15.0 6.0 Garden Maintenance $30,000 6,000 $24,000 Per Hour $15.0 3.0 Sales Variable expenses Contribution margin Fixed expenses Operating income $ 9.0 $12.0 Total $150,000 54,000 96,000 26,880 $ 69,120 Required: 1. Compute the overall CM ratio for the company. Overall contribution margin ratio 64% 2. Compute the overall break-even point for the company in sales dollars. Overall break-even point $ 42,000 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 Garde Maintenance Number of hours 5. At the overall break-even point in total hours, how many hours of each service must be provided for the company Lawn Care Garden Maintenance Number of hours 6. Calculate the overall sales in dollars required to earn an after-tax profit of $79,800 if the tax rate is 30%. Sales required to achieve after-tax target profit $ 302,812
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started