Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty employees worked a total of 36,000 hours last year, 24,000 on residential jobs and 12,000 on commercial jobs. Wages were $14 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is allocated on the basis of labor-hours worked, which is also the basis for customer charges. Because of increased competition for commercial accounts, EL&P can charge $37 per hour for residential work, but only $29 per hour for commercial work. Required: If overhead for the year was $132,620, what were the profits of the residential and commercial services using labor-hours as the allocation base? (Do not round intermediate calculations. Round final answers to the nearest whole dollar.) Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and suing supplies, which can be traced as follows. Cost Driver Volume Activity Cost Driver Cost Commercial Residential Traveling Number of clients served $ 18,200 15 50 Using equipment Equipment hours 40,320 3,900 2,400 Using supplies Area serviced in square yards 74,100 130,000 60,000 Total overhead $132,620 Recalculate profits for commercial and residential services based on these activity bases. (Do not round intermediate calculations. Round final answers to the nearest whole dollar.) Commercial Residential Revenue __________ _________ Direct Labor __________ __________ Overhead __________ ___________ Profit ___________ ___________ Total Overhead ___________ ___________ Profit ___________ ___________
Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service.
Twenty employees worked a total of 36,000 hours last year, 24,000 on residential jobs and 12,000 on commercial jobs. Wages were $14 per hour for all work done. Any materials used are included in
Required:
- If overhead for the year was $132,620, what were the profits of the residential and commercial services using labor-hours as the allocation base? (Do not round intermediate calculations. Round final answers to the nearest whole dollar.)
- Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and suing supplies, which can be traced as follows.
Cost Driver Volume
Activity Cost Driver Cost Commercial Residential
Traveling Number of clients served $ 18,200 15 50
Using equipment Equipment hours 40,320 3,900 2,400
Using supplies Area serviced in square yards 74,100 130,000 60,000
Total overhead $132,620
Recalculate profits for commercial and residential services based on these activity bases. (Do not round intermediate calculations. Round final answers to the nearest whole dollar.)
Commercial Residential
- Revenue __________ _________
Direct Labor __________ __________
Overhead __________ ___________
Profit ___________ ___________
- Total Overhead ___________ ___________
Profit ___________ ___________
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