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
- Prepare Henley”s contribution format income statement for the month.
- What is the expected monthly operating income if 150 customers are added?
- Mr. Henley is exploring options to reduce the annual bookkeeping costs.