Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Oriole Horticulture provides and maintains live plants in office buildings. The company's 938 customers are charged $30 per month for this service, which includes weekly

image text in transcribedimage text in transcribed
Oriole Horticulture provides and maintains live plants in office buildings. The company's 938 customers are charged $30 per month for this service, which includes weekly watering visits. The variable cost to service a customer's location is $17 per month. The company incurs $2,490 each month to maintain its fleet of four service vans and $3,136 each month in salaries. Oriole pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions. (a) Prepare Oriole's contribution format income statement for the month. Per Unit $What is the expected monthly operating income if 250 customers are added? Operating income $ eTextbook and Media Save for Later Attempts: 0 of 3 used Submit Answer . (c) Mr. Oriole is exploring options to reduce the annual bookkeeping costs. Option 1: Renegotiate the current contract with the bookkeeping service to pay a flat fee of $10,248 per year plus $1 per customer per month. Option 2: Hire a part-time bookkeeper for $19,388 per year to handle the invoicing and simple accounting. He would need to pay $5,300 per year to have taxes and year-end financial statements prepared. Compare the current bookkeeping cost with the two options at customer levels of 938, 1,120, and 1,200. 938 1,120 1,200 Current cost Option 1 Option 2

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

Accounting Equations & Answers

Authors: Barcharts, BarCharts Inc

1st Edition

1423218248, 9781423218241

More Books

Students also viewed these Accounting questions

Question

2. Information that comes most readily to mind (availability).

Answered: 1 week ago