Sunland Horticulture provides and maintains live plants in office buildings. The companys 896 customers are charged $37 per month for this service, which includes weekly watering visits. The variable cost to service a customers location is $17 per month. The company incurs $2,294 each month to maintain its fleet of four service vans and $3,124 each month in salaries. Sunland pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions.

(a)

Prepare Sunlands contribution format income statement for the month.

s				enter a total amount for this statement

(b)

What is the expected monthly operating income if 170 customers are added?

Operating income

enter the operating income amount in dollars

(c)

Mr. Sunland 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 $10,359 per year plus $1 per customer per month.
Option 2:	Hire a part-time bookkeeper for $19,588 per year to handle the invoicing and simple accounting. He would need to pay $6,900 per year to have taxes and year-end financial statements prepared.

Compare the current bookkeeping cost with the two options at customer levels of 896, 1,408, and 1,420.

		896	1,408	1,420
Current cost		enter a dollar amount	enter a dollar amount	enter a dollar amount
Option 1		enter a dollar amount	enter a dollar amount	enter a dollar amount
Option 2		enter a dollar amount	enter a dollar amount	enter a dollar amount