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Sunland Horticulture provides and maintains live plants in office buildings. The company's 914 customers are charged $38 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 $2,468 each month to maintain its fleet of four service vans and $3,284 each month in salaries. Sunland pays a bookkeeping service $2 per customer each month to handle all invoicing and accounting functions. (a) Your answer is correct.
(c) Mr. Sunland is exploring options to reduce the annual bookkeeping costs. Option 1: Renegotiate the current contract with the bookkeeping service to pay a flat fee of $10,362 per year plus $1 per customer per month. Option 2: Hire a part-time bookkeeper for $18,698 per year to handle the invoicing and simple accounting. He would need to pay $6,500 per year to have taxes and year-end financial statements prepared. Compare the current bookkeeping cost with the two options at customer levels of 914, 1,286, and 1,458. Current cost Option 1 Option 2 $ Save for Later $ $ eTextbook and Media 914 $ $ $ 1,286 $ $ $ 1,458 Attempts: 0 of 3 used Submit Answer