P 1. Power Brite Painting Company specializes in refurbishing exterior painted surfaces that have been hard hit by humidity and insect debris. It uses a special technique, called pressure cleaning, before priming and painting the surface. The refurbishing process involves the following steps:

1. Unskilled laborers trim all trees and bushes within two feet of the structure.

2. Skilled laborers clean the building with a high-pressure cleaning machine, using about 6 gallons of chlorine per job.

3. Unskilled laborers apply a coat of primer.

4. Skilled laborers apply oil-based exterior paint to the entire surface.

On average, skilled laborers work 12 hours per job, and unskilled laborers work 8 hours. The refurbishing process generated the following operating results during the year on 628 jobs:

Skilled labor $20 per hour Unskilled labor $8 per hour Gallons of chlorine used 3,768 gallons at $5.50 per gallon Paint primer 7,536 gallons at $15.50 per gallon Paint 6,280 gallons at $16 per gallon Depreciation of paint-spraying $600 per month depreciation equipment Lease of two vans $800 per month total Rent on storage building $450 per month Data on utilities for the year are as follows:
Month Number of Jobs Cost Hours Worked January 42 $ 3,950 840 February 37 3,550 740 March 44 4,090 880 April 49 4,410 980 May 54 4,720 1,080 June 62 5,240 1,240 July 71 5,820 1,420 August 73 5,890 1,460 September 63 5,370 1,260 October 48 4,340 960 November 45 4,210 900 December 40 3,830 800 Totals 628 $55,420 12,560 Required 1. Classify the costs as variable, fixed, or mixed.
2. Using the high-low method, separate mixed costs into their variable and fixed components. Use total hours worked as the basis.
3. Compute the average cost per job for the year. (Hint: Divide the total of all costs for the year by the number of jobs completed.)
4. Project the average cost per job for next year if variable costs per job increase 20 percent.
5. Why can actual utility costs vary from the amount computed using the utilities cost formula (requirement 2)?