Sunland Horticulture provides and maintains live plants in office buildings. The company's 884 customers are charged $37 per month for this service, which includes weekly watering visits. The variable cost to service a customer's location is $17per month. The company incurs $2,194 each month to maintain its fleet of four service vans and $3.004 each month in salaries. Sunland pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functionsA.) picture one B.) What is the expected monthly operating income if 174 customers are added?Operating income $________C.) second picture BPrepare Sunland's contribution format income statement for the month.<>>$$|$Per Unit (c)Mr. Sunland is exploring options to reduce the annual bookkeeping costs.Option 1:Renegotiate the current contract with the bookkeeping service to pay a flat fee of $10,497 per year plus $1 per customer per month.Option 2:Hire a part-time bookkeeper for $18,496 per year to handle the invoicing and simple accounting. He would need to pay $5,000 per year to have taxes and year-end financial statementsprepared.Compare the current bookkeeping cost with the two options at customer levels of 884, 1,597, and 1,638.Current costOption 1Option 2$$$884$$1,597$1,638

Contribution is the excess revenue after absorption of variable cost. After deducting fixed cost…

Answered: Sunland Horticulture provides and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sunland Horticulture provides and maintains live plants in office buildings. The company's 884 customers are charged $37 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 $2,194 each month to maintain its fleet of four service vans and $3.004 each month in salaries. Sunland pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions A.) picture one B.) What is the expected monthly operating income if 174 customers are added? Operating income $________ C.) second picture

B
Prepare Sunland's contribution format income statement for the month.
<
>
>
$
$
|
$
Per Unit

(c)
Mr. Sunland 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 $10,497 per year plus $1 per customer per month.
Option 2:
Hire a part-time bookkeeper for $18,496 per year to handle the invoicing and simple accounting. He would need to pay $5,000 per year to have taxes and year-end financial statements
prepared.
Compare the current bookkeeping cost with the two options at customer levels of 884, 1,597, and 1,638.
Current cost
Option 1
Option 2
$
$
$
884
$
$
1,597
$
1,638

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