Question:
Henley Horticulture provides and maintains live plants in office buildings. The company"s 850 customers are charged $30 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 $2,000 each month to maintain its fleet of four service vans and $3,000 each month in salaries. Henley pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions.
Required
1. Prepare Henley"s contribution format income statement for the month.
2. What is the expected monthly operating income if 150 customers are added?
3. Mr. Henley is exploring options to reduce the annual bookkeeping costs.