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Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
Edition 1ISBN: 978-0538736787 Exercise 20
BREAK-EVEN FOR A SERVICE FIRM
Sasha Melton owns and operates The Green Belt Company (GBC), which provides live plants and flower arrangements to professional offices. Sasha has fixed costs of $2,380 per month for office/greenhouse rent, advertising, and a delivery van. Variable costs for the plants, fertilizer, pots, and other supplies average $25 per job. GBC charges $60 per month for the average job.
Required:
1. How many jobs must GBC average each month to break even?
2. What is the operating income for GBC in a month with 65 jobs? With 90 jobs?
3. Sasha faces a tax rate equal to 30 percent. How many jobs must Sasha have per month to earn an after-tax income of $980? (Round your answer up to whole units.)
4. Suppose that Sasha's fixed costs increase to $2,500 per month and she decides to increase the price to $75 per job. What is the new break-even point in number of jobs per month? (Round any fractional answer up to the next whole number of jobs.)
Sasha Melton owns and operates The Green Belt Company (GBC), which provides live plants and flower arrangements to professional offices. Sasha has fixed costs of $2,380 per month for office/greenhouse rent, advertising, and a delivery van. Variable costs for the plants, fertilizer, pots, and other supplies average $25 per job. GBC charges $60 per month for the average job.
Required:
1. How many jobs must GBC average each month to break even?
2. What is the operating income for GBC in a month with 65 jobs? With 90 jobs?
3. Sasha faces a tax rate equal to 30 percent. How many jobs must Sasha have per month to earn an after-tax income of $980? (Round your answer up to whole units.)
4. Suppose that Sasha's fixed costs increase to $2,500 per month and she decides to increase the price to $75 per job. What is the new break-even point in number of jobs per month? (Round any fractional answer up to the next whole number of jobs.)
Explanation
Verified
Verified
1.
Break-Even point:
It is a point at ...
Cornerstones of Cost Accounting 1st Edition by Don Hansen,Maryanne Mowen
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