Oriole Horticulture provides and maintains live plants in office buildings. The company's 854 customers are charged $39 per month for this service, which includes weekly watering visits. The variable cost to service a customer's location is $17 per month. The company incurs $2,308 each month to maintain its fleet of four service vans and $3,138 each month in salaries. Oriole pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions. (a) (b) What is the expected monthly operating income if 226 customers are added? (c) Operating income $ eTextbook and Medial Save for Later Mr. Oriole is exploring options to reduce the annual bookkeeping costs. Option 1: Renegotiate the current contract with the bookkeeping service to pay a flat fee of $10,467 per year plus $1 per customer per month. Option 2: Hire a part-time bookkeeper for $19,184 per year to handle the invoicing and simple accounting. He would need to pay $6,600 per year to have taxes and year-end financial statements prepared. Compare the current bookkeeping cost with the two options at customer levels of 854, 1,100, and 1,150. Current cost Option 1 Option 2 $ Save for Later $ $ eTextbook and Media 854 $ Attempts: 0 of 3 used $ $ 1,100 $ Submit Answer $ 1,150 Attempts: 0 of 3 used Submit Answer
Oriole Horticulture provides and maintains live plants in office buildings. The company's 854 customers are charged $39 per month for this service, which includes weekly watering visits. The variable cost to service a customer's location is $17 per month. The company incurs $2,308 each month to maintain its fleet of four service vans and $3,138 each month in salaries. Oriole pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions. (a) (b) What is the expected monthly operating income if 226 customers are added? (c) Operating income $ eTextbook and Medial Save for Later Mr. Oriole is exploring options to reduce the annual bookkeeping costs. Option 1: Renegotiate the current contract with the bookkeeping service to pay a flat fee of $10,467 per year plus $1 per customer per month. Option 2: Hire a part-time bookkeeper for $19,184 per year to handle the invoicing and simple accounting. He would need to pay $6,600 per year to have taxes and year-end financial statements prepared. Compare the current bookkeeping cost with the two options at customer levels of 854, 1,100, and 1,150. Current cost Option 1 Option 2 $ Save for Later $ $ eTextbook and Media 854 $ Attempts: 0 of 3 used $ $ 1,100 $ Submit Answer $ 1,150 Attempts: 0 of 3 used Submit Answer
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
A1
Transcribed Image Text:Oriole Horticulture provides and maintains live plants in office buildings. The company's 854 customers are charged $39 per month
for this service, which includes weekly watering visits. The variable cost to service a customer's location is $17 per month. The
company incurs $2,308 each month to maintain its fleet of four service vans and $3,138 each month in salaries. Oriole pays a
bookkeeping service $2 per customer each month to handle all invoicing and accounting functions.
(a)
(b)
What is the expected monthly operating income if 226 customers are added?
(c)
Operating income $
eTextbook and Media
Save for Later
Mr. Oriole is exploring options to reduce the annual bookkeeping costs.
Option 1: Renegotiate the current contract with the bookkeeping service to pay a flat fee of $10,467 per year plus $1 per
customer per month.
Option 2: Hire a part-time bookkeeper for $19,184 per year to handle the invoicing and simple accounting. He would need to
pay $6,600 per year to have taxes and year-end financial statements prepared.
Compare the current bookkeeping cost with the two options at customer levels of 854, 1,100, and 1,150.
Current cost
Option 1
Option 2
$
Save for Later
$
$
eTextbook and Media
854
$
LA
tA
Attempts: 0 of 3 used
$
$
1,100
$
tA
$
LA
Submit Answer
$
1,150
Attempts: 0 of 3 used Submit Answer
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