Question
Tuck's Trees is a tree farm.He sells a large variety of trees types ranging in size from potted trees to juvenile aged trees.Tuck's has the
Tuck's Trees is a tree farm.He sells a large variety of trees types ranging in size from potted trees to "juvenile" aged trees.Tuck's has the following fixed and variable costs for the potted tree types.Show details and computations.Each "potted" tree sells for $100.
Fixed Costs (per month)Variable Costs per tree
Land Rental$1000Seedling$5.00
Fertilizer 300Vigor Sprout plant food2.00
Horticultural services500Packaging5.00
Equipment rentals300Water50.00
Wages of supervisor 600Advertising5.00
____________
Total fixed/ month$2700Total variable per tree $67.00
- How many trees of the potted type must be sold monthly at the price of $100 each for the potted tree segment of the business to breakeven?
- What revenue would the sale of the breakeven quantity at $100 per tree generate?
3.How many potted trees must be sold to earn $2000 more than the $2700 fixed costs per month?
4.What is the Contribution Margin Ratio (CMR), if the selling price is $100 per tree?
5.If you believe you can only sell 120 potted trees a month, what price per tree should you charge to cover fixed costs and earn $2000 more per month?
6.It is decided to charge $110 per tree.It is still desired to earn $2000 per month above monthly fixed costs.If only 120 trees are sold per month,what will the DOL be?.
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