Alclear Pool & Spa presently provides a weekly maintenance service to 150 homes. Variable costs amount to approximately $12 per week for labour, mileage, chemicals and other supplies. Fixed costs are approximately $13 000 per quarter (13 weeks). Customers pay $270 per quarter for the weekly service. All contracts are written for one quarter (13 weeks).
Determine the number of customers (rounded) to break even.

Question

Quizplus · Accepted Answer

To find the break-even point, calculate the contribution margin per customer per quarter: Revenue per customer per quarter ($270) minus variable costs per customer per quarter ($12 * 13 weeks = $156) equals $114. Then, divide the total fixed costs per quarter ($13,000) by the contribution margin per customer ($114) to get approximately 114 customers needed to break even.

Alclear Pool & Spa Presently Provides a Weekly Maintenance Service