Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen

Exercise 48

Break-Even for a Service Firm
Jonah Graham owns and operates The Green Thumb Company (GTC), which provides live plants and flower arrangements to professional offices. Jonah has fixed costs of $3,240 per month for office/greenhouse rent, advertising, and a delivery van. Variable costs for the plants, fertilizer, pots, and other supplies average $24 per job. GTC charges $60 per month for the average job.
Required:
1. How many jobs must GTC average each month to break even?
2. What is the operating income for GTC in a month with 88 jobs? With 95 jobs?
3. Jonah faces a tax rate equal to 25 percent. How many jobs must Jonah have per month to earn an after-tax income of $1,200? (Round your answer to whole units.)
4. Suppose that Jonah's fixed costs increase to $3,400 per month and he decides to increase the price to $75 per job. What is the new break-even point in number of jobs per month? (Round your answer to the nearest whole number of jobs.)