Use this information for the four questions. There are two ways to establish a summer lawn mowing business.

• Option 1 is to rent-to-own for 5 years a large riding zero-turn lawnmower for $4,000 per year and hire one person to operate this mower for $15 an hour. It will take 1 hour to mow each lawn.
• Option 2 is to rent to own 3 push mowers for five years for $200 per mower per year and hire people for $15 per hour to push these mowers. It will take 1 hour to mow the lawn with 3 push mowers.
• The price to mow each lawn is $60 for both options 1 and 2.

Questions:

1. Which of these options has a higher fixed cost? Which has higher variable cost per unit?
2. What is the break even point in sales for both options- You must get both correct to get credit.
3. What is the break even point in units for both options- you must get both correct to get credit.
4. If we have sales above our break even point, how does an increase of fixed expenses affect profit?