Answer:
Break-even point = 110 lawns & Break-even sales point = $8,800
Explanation:
Total fixed costs = Depreciation + Advertising + Insurance
Total fixed costs = 1,400 + 200 + 3,680
Total fixed costs = $5280/month
Total variable cost per unit = Weed + Direct labor + Fuel
Total variable cost per unit = 13 + 16 + 3
Total variable cost per unit = $32/lawn
Contribution margin ratio = (Sales per unit - variable cost per unit) / sales per unit
Contribution margin ratio = (80 - 32) / 80
Contribution margin ratio = 0.6
Contribution margin ratio = 60%
Break-even sales = Fixed costs / contribution margin ratio
Break-even sales = $5280 / 60%
Break-even sales = $8800
Break-even sales units = Break-even sales / sales per unit
Break-even sales units = 8800 / 80
Break-even sales units = 110 lawns
Break-even point = 110 lawns & Break-even sales point = $8,800
