Please answer do not image format Lamphere Lawn Care provides lawn and gardening services. The price of the service is fixed at a flat rate for each service, and mostcosts of providing the service are the same, given the similarity in the lawns and lots. The owner budgets income by estimating twofactors that fluctuate with the economy: the contribution margin associated with each service call and the number of customers whowill request lawn service. Looking at next year, the owner develops the following estimates of contribution margin (price less variablecost of the service, including labor) and the estimated number of service calls. Although the owner understands that it is not strictlytrue, the owner assumes that the cost of fuel and the number of customers are independent.Contribution Margin per Service Call(Price -Number ofVariable cost) Service CallsScenarioExcellentFairPoorIn addition to the variable costs of service, the owner estimates that other costs are $49,000 plus $8 for each service call in excess of3,600 calls. Annual administrative and marketing costs are estimated to be $31,000 plus 10 percent of the contribution marginExcellentFairPoorExcellentRequired:Use a spreadsheet to prepare an analysis of the possible operating income for Lamphere Lawn Care similar to that in Exhibit 1316What is the range of possible operating incomes?FairPoorExcellentFairPoorContributionMargin PerService CallS$$$$$$:302012$$S5$88288530201230201230201210,4007,9505,650Number ofService Calls10,40010,40010,4007.9507,9507,9505,6505,6505,650TotalContributionMarginOther Costs Marketing andAdministrativeOperatingProfit (Loss)$S$$$$5$$0000000.0.0

Selling price per unit: It is the price at which a unit of product is sold in the market.Variable…

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 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 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 1316 What is the range of possible operating incomes? Fair Poor Excellent Fair Poor Number of Variable cost) Service Calls $ 30 20 12 Contribution Margin Per Service Call S S $ $ $ $ $ $ $ 30 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 5,050 Total Contribution. Other Costs Marketing and Administrative Margin Operating Profit (Loss) $ S S $ $ $ 5 $ $ 0 0 0 0 0 0 0 0 0

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

Problem 3P: Jensen Tire Auto is deciding whether to purchase a maintenance contract for its new computer wheel...