SunlandHorticulture provides and maintains live plants in office buildings. The company's950customers are charged $40per month for this service, which includes weekly watering visits. The variable cost to service a customer's location is $19per month. The company incurs $2,254each month to maintain its fleet of four service vans and $3,300each month in salaries.Sunlandpays a bookkeeping service $2per customer each month to handle all invoicing and accounting functions.

C. Mr.Sunlandis exploring options to reduce theannualbookkeeping costs.

Option 1:Renegotiate the current contract with the bookkeeping service to pay a flat fee of $10,389per year plus $1per customer per month.

Option 2:Hire a part-time bookkeeper for $19,596per year to handle the invoicing and simple accounting. He would need to pay $6,600per year to have taxes and year-end financial statements prepared.

Compare the current bookkeeping cost with the two options at customer levels of950,1,510, and1,586.

950 1510 1586

current cost ______ ______ ________

option 1 ______ ______ ________

option 2 ______ ______ ________