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#2,8 8 5 ports Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes
#2,8
8 5 ports 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 services Twenty employees worked a total of 39,000 hours last year, 26,000 on residential jobs and 13.000 on commercial Jobs, Wages were 514 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is allocated on the basis of lobor hours worked, which is also the basis for customer charges. Because of increased competition for commercial accounts, EL&P can charge $36 per hour for residential work, but only $27 per hour for commercial work. Required: o. If overhead for the year was $123.240, what were the profits of the residential and commercial services using tobor hours as the allocation base? (Do not round intermediate calculations. Round final answers to the nearest whole dollar) b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows. book Reference Activity Traveling Using equipment Using supplies Total overhead Cost Driver Number of clients served Equipment hours Area serviced in square yards Cost $14,500 39,440 69,300 $123,240 Cost Driver Volume Commercial Residential 13 45 3,900 1,900 150,000 60,000 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
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