Gulf Shore Lawn and Garden Maintenance provides two general outdoor services: lawn maintenance and garden maintenance. The company charges customers $15 per hour for each type of service, but lawn maintenance has higher variable costs ($7 per hour) than garden maintenance ($3 per hour) because of fuel expenses incurred to operate lawn-mowing equipment. All employees are paid a fixed monthly salary. A contribution format income statement for a recent month for the two services appears below. During the month, 6,000 hours of lawn maintenance services and 2,000 hours of garden maintenance were provided:
1. Compute the overall CM ratio for the company.
2. Compute the overall break-even point for the company in sales dollars.
3. Compute the weighted-average CM per hour for the company.
4. Calculate the overall break-even point for the company in hours.
5. At the overall break-even point in total hours, how many hours of each service must be provided for the company to break even?
6. Calculate the overall sales in dollars required to earn an after-tax profit of $42,000 if the tax rate is 30%.

  • CreatedJuly 08, 2015
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