=+contracts for, even if he doesn’t need them all. Therefore, there are essentially no variable costs. Rich also has information concerning the amount of revenue and the labor and equipment hours needed for the “typical” landscaping job:

Job revenue $2,000 per job Labor hours per job 30 hours Equipment hours per job 20 hours Finally, Rich has identified three possible demand levels.

These demand levels, with their associated probabilities, are as follows:

DEMAND LEVEL NUMBER OF JOBS PROBABILITY High demand 300 30%

Medium demand 200 40%

Low demand 120 30%