Harry and Sally own a dog-walking service. Their service includes: driving to their customer’s homes; taking the customer’s dog on a 10-minute walk; 5 minutes of attention/playtime in or just outside the customer’s house; refilling water and/or food; waste removal during the walk; and one treat per visit.

They charge customers $15 per dog-walk.

Variable costs total $8.50 per walk - $6.50 for labor/supplies plus $2.00 to reimburse fuel.

Their average customer purchases 15 walks per month.

Their average customer remains a customer for 7 months.

H&S’s fixed costs are a low $350 per month.

1. What is the contribution margin ($) per walk?
2. What is the contribution margin (%)?
3. How many walks do H&S need to sell in a month to break even?
4. If H&S want to earn $1000/month in profit, how many walks do they need to sell?
5. The city H&S are operating in is considering increasing the legal minimum wage, which would add an additional $0.85 in variable costs per walk. If H&S retain the same selling price, how many walks would they need to sell to make $1000/month in profit if the minimum wage is increased?
6. Continuing with the increased minimum wage example in #5 (variable costs increased by $0.85 per walk), if H&S wanted to change their selling price such that they could earn $2000 in profit, what new price would they need to charge (assume same number of sales as in #5)?