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suburban lawn-care company as nonlncremental fixed costs of $6,000 per month. It currently services 400 lawns per month at an average price of $30 per
suburban lawn-care company as nonlncremental fixed costs of $6,000 per month. It currently services 400 lawns per month at an average price of $30 per lawn. The company's variable costs are $19 per lawn. If the company's total sales increase beyond 550 lawns per month (i.e., 150 more lawns than are currently serviced), new equipment would have to be purchased that would involve incremental fixed costs of $760 per month. (a) Calculate the breakeve $5 per lawn price increase. (b) Calculate the breakeven sales le a $5 per lawn price decrease. (Hint: consider the possibility of Incremental fixed costs.) (0) Data from past price changes indicates that the company can expect a price elasticity of 'l.8. Based on this price elasticity, calculate the unit sales change that the company could expect from a $5 price increase. Then calculate the unit sales change that the compan could ex ect from a $5 price decrease.\" (d) Using your answers from Parts (a), (b), and HUI VIUVUI' IIVI'V unllulllvlll. I'vulu IIUVV EV MU purchased that would involve incremental fixed costs of $760 per month. (a) Calculate the breakeven sales level for a $5 per lawn price increase. _ (b) Calculate the breakeven a $5 per lawn price decrease. (Hint: consider the possibility of incremental fixed costs.) (c) Data from past price changes indicates that the company can expect a price elasticity of 'l.8. Based on this price elasticity, calculate the unit sales change that the company could expect from a $5 price increase. Then calculate the unit sales change that the compan could e from a $5 price decrease (d) Using your answers from Parts (a) )and (c) and the change in profit formula, ca(lculate the change in profit that the lawncare company could expect for a $5 price increase and for a $5 price decrease (again, show your work). Based on these calculations which one of these two price changes would you recommend the company carry out
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