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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 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 Call Scenario. Excellent Fair Poor Excellent Fair Poor Excellent In addition to the variable costs of service, the owner estimates that other costs are $49,000 plus $8 for each service call in excess of 3,600 calls. Annual administrative and marketing costs are estimated to be $31,000 plus 10 percent of the contribution margin Fair Poor Excellent Fair Poor Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 1316 What is the range of possible operating incomes? (Price - Number of Variable cost) Service Calls S $ $ S $ $ 30 20 12 Contribution Margin Per Service Call $ $ $ $ 882882882 30 20 12 30 20 12 30 20 12 Number of Service Calls 10,400 10,400 10,400 7,950 5,650 10,400 7,950 7,950 7,950 5,650 5,050 5,650 Total Contribution Margin Other Costs Marketing and Operating Administrative Profit (Loss) $ S $ $ S S $ 0 0 0 0 0 0 0 0 0

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 Call Scenario. Excellent Fair Poor Excellent Fair Poor Excellent In addition to the variable costs of service, the owner estimates that other costs are $49,000 plus $8 for each service call in excess of 3,600 calls. Annual administrative and marketing costs are estimated to be $31,000 plus 10 percent of the contribution margin Fair Poor Excellent Fair Poor Required: Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 1316 What is the range of possible operating incomes? (Price - Number of Variable cost) Service Calls S $ $ S $ $ 30 20 12 Contribution Margin Per Service Call $ $ $ $ 882882882 30 20 12 30 20 12 30 20 12 Number of Service Calls 10,400 10,400 10,400 7,950 5,650 10,400 7,950 7,950 7,950 5,650 5,050 5,650 Total Contribution Margin Other Costs Marketing and Operating Administrative Profit (Loss) $ S $ $ S S $ 0 0 0 0 0 0 0 0 0

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
Section: Chapter Questions
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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 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 Call (Price - Scenario Excellent Fair Poor Excellent Fair Poor Excellent In addition to the variable costs of service, the owner estimates that other costs are $49,000 plus $8 for each service call in excess of 3,600 calls. Annual administrative and marketing costs are estimated to be $31,000 plus 10 percent of the contribution margin Fair Poor Excellent Fair Poor 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? $ $ Contribution Margin Per Service Call $ $ $ $ $ Number of Variable cost) Service Calls $ S5 $:30 20 12 $ 30 388588388 20 12 30 20 12 30 20 12 10,400 7,950 5,650 Number of Service Calls 10,400 10,400 10,400 7,950 7,950 7,950 5,650 5,650 5,650 Total Contribution Margin Other Costs Marketing and Administrative Operating Profit (Loss) $ $ $ $ $ $ $ $ 0 0 0 0 0 0 0. 0 0
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 Call (Price - Scenario Excellent Fair Poor Excellent Fair Poor Excellent In addition to the variable costs of service, the owner estimates that other costs are $49,000 plus $8 for each service call in excess of 3,600 calls. Annual administrative and marketing costs are estimated to be $31,000 plus 10 percent of the contribution margin Fair Poor Excellent Fair Poor 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? $ $ Contribution Margin Per Service Call $ $ $ $ $ Number of Variable cost) Service Calls $ S5 $:30 20 12 $ 30 388588388 20 12 30 20 12 30 20 12 10,400 7,950 5,650 Number of Service Calls 10,400 10,400 10,400 7,950 7,950 7,950 5,650 5,650 5,650 Total Contribution Margin Other Costs Marketing and Administrative Operating Profit (Loss) $ $ $ $ $ $ $ $ 0 0 0 0 0 0 0. 0 0
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