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Lamphere Lawn Care provides lawn and gardening services. The price of the service is fixed at a flat rate for each service, and most costs of providing the service are the same, given the similarity in the lawns and lots. The owner budgets income by estimating two factors that fluctuate with the economy: the contribution margin associated with each service call and the number of customers wha will request lawn service. Looking at next year, the owner develops the following estimates of contribution margin (price less variable cost of the service, including labor) and the estimated number of service calls. Although the owner understands that it is not strictly true, the owner assumes that the cost of fuel and the number of customers are independent Contribution Margin per Service Call Scenario. Excellent Fair Poor (Price - Number of Variable cost) Service Calls $ 40 30 12 Excellent In addition to the variable costs of service, the owner estimates that other costs are $59,000 plus $8 for each service call in excess 4,600 calls. Annual administrative and marketing costs are estimated to be $41,000 plus 10 percent of the contribution margin Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 13.16 What is the range of possible operating incomes? 10,650 8,200 5,900 Contribution Margin Per Service Call 40 Number of Service Calls 10.650 in eenl Total Contribution Margin Other Costs Marketing and Administrative Operating Profit (Loss)

Lamphere Lawn Care provides lawn and gardening services. The price of the service is fixed at a flat rate for each service, and most costs of providing the service are the same, given the similarity in the lawns and lots. The owner budgets income by estimating two factors that fluctuate with the economy: the contribution margin associated with each service call and the number of customers wha will request lawn service. Looking at next year, the owner develops the following estimates of contribution margin (price less variable cost of the service, including labor) and the estimated number of service calls. Although the owner understands that it is not strictly true, the owner assumes that the cost of fuel and the number of customers are independent Contribution Margin per Service Call Scenario. Excellent Fair Poor (Price - Number of Variable cost) Service Calls $ 40 30 12 Excellent In addition to the variable costs of service, the owner estimates that other costs are $59,000 plus $8 for each service call in excess 4,600 calls. Annual administrative and marketing costs are estimated to be $41,000 plus 10 percent of the contribution margin Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 13.16 What is the range of possible operating incomes? 10,650 8,200 5,900 Contribution Margin Per Service Call 40 Number of Service Calls 10.650 in eenl Total Contribution Margin Other Costs Marketing and Administrative Operating Profit (Loss)

Essentials of Business Analytics (MindTap Course List)
Essentials of Business Analytics (MindTap Course List)
2nd Edition
ISBN:9781305627734
Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson
Chapter7: Linear Regression
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Scenario Excellent Fair Poor In addition to the variable costs of service, the owner estimates that other costs are $59,000 plus $8 for each service call in excess of 4,600 calls. Annual administrative and marketing costs are estimated to be $41,000 plus 10 percent of the contribution margin. Excellent Fair Poor Excellent Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 13.16 What is the range of possible operating incomes? Fair Poor Excellent Fair Poor S Contribution Margin Pera Service Call $ $ S Variable cost) Service Calls 10,650 8,200 5,900 $ S $ 5:40 30 12 $ S 40 30 12 40 30 12 40 30 12 Number of Service Calls 10,650 10,650 10,650 8,200 8,200 8,200 5,900 5.900 5.900 Total Contribution Margin Other Costs Marketing and Administrative Operating Profit (Loss)
Transcribed Image Text:Scenario Excellent Fair Poor In addition to the variable costs of service, the owner estimates that other costs are $59,000 plus $8 for each service call in excess of 4,600 calls. Annual administrative and marketing costs are estimated to be $41,000 plus 10 percent of the contribution margin. Excellent Fair Poor Excellent Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 13.16 What is the range of possible operating incomes? Fair Poor Excellent Fair Poor S Contribution Margin Pera Service Call $ $ S Variable cost) Service Calls 10,650 8,200 5,900 $ S $ 5:40 30 12 $ S 40 30 12 40 30 12 40 30 12 Number of Service Calls 10,650 10,650 10,650 8,200 8,200 8,200 5,900 5.900 5.900 Total Contribution Margin Other Costs Marketing and Administrative Operating Profit (Loss)
Lamphere Lawn Care provides lawn and gardening services. The price of the service is fixed at a flat rate for each service, and most costs of providing the service are the same, given the similarity in the lawns and lots. The owner budgets income by estimating two factors that fluctuate with the economy: the contribution margin associated with each service call and the number of customers who will request lawn service. Looking at next year, the owner develops the following estimates of contribution margin (price less variable cost of the service, including labor) and the estimated number of service calls. Although the owner understands that it is not strictly true, the owner assumes that the cost of fuel and the number of customers are independent. Contribution Margin per Service Coll Scenario Excellent Fair Poor (Price - Number of Variable cost) Service Calls $40 Excellent 30 12 In addition to the variable costs of service, the owner estimates that other costs are $59,000 plus $8 for each service call in excess of 4,600 calls. Annual administrative and marketing costs are estimated to be $41,000 plus 10 percent of the contribution margin Contribution Margin Per Service Call- Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 13.16. What is the range of possible operating incomes? 10,650 8,200 5,900 40 20 Number of Service Calls 10.650 in cent Total Contribution Margin 57 Other Costs Marketing and Administrative Operating Profit (Loss)
Transcribed Image Text:Lamphere Lawn Care provides lawn and gardening services. The price of the service is fixed at a flat rate for each service, and most costs of providing the service are the same, given the similarity in the lawns and lots. The owner budgets income by estimating two factors that fluctuate with the economy: the contribution margin associated with each service call and the number of customers who will request lawn service. Looking at next year, the owner develops the following estimates of contribution margin (price less variable cost of the service, including labor) and the estimated number of service calls. Although the owner understands that it is not strictly true, the owner assumes that the cost of fuel and the number of customers are independent. Contribution Margin per Service Coll Scenario Excellent Fair Poor (Price - Number of Variable cost) Service Calls $40 Excellent 30 12 In addition to the variable costs of service, the owner estimates that other costs are $59,000 plus $8 for each service call in excess of 4,600 calls. Annual administrative and marketing costs are estimated to be $41,000 plus 10 percent of the contribution margin Contribution Margin Per Service Call- Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 13.16. What is the range of possible operating incomes? 10,650 8,200 5,900 40 20 Number of Service Calls 10.650 in cent Total Contribution Margin 57 Other Costs Marketing and Administrative Operating Profit (Loss)
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