Budgeting for a service company. Shiny Homes provides house cleaning services to parents of college students. Overhead is accumulated in two cost pools, one for travel to jobs, allocated based on miles driven, and one for house cleaning, allocated based on direct labor-hours (DLH).

J.P. Tillo, company President, estimates that his house cleaners will work 2,500 jobs during the year. Each home averages 3,000 square feet to be cleaned, and requires six direct labor-hours and 10 miles of travel. Tillo pays his house cleaners $15 per hour. Taxes and benefits equal 15% of wages. Wages, taxes, and benefits are considered direct labor costs. The following table presents the budgeted overhead costs for the Travel and House Cleaning cost pools:

Required: 1. Prepare a direct labor budget in both hours and dollars. Calculate the direct labor rate. 2. Calculate the budgeted overhead allocation rates for travel and house cleaning.

Complete all areas shaded gray

1	Direct Labor Budget in Hours and Dollars
	Hours Budget:
	Total Direct Labor Hours Required
	Cost Budget:
	Total Direct Labor Cost
	Total Cost per DLH (total cost/total hrs)
2	Budgeted Overhead Allocation Rates
	Travel budgeted overhead rate=
		divided by
	Travel budgeted overhead rate per mile
	House cleaning budgeted overhead rate=
		divided by
	House cleaning budgeted overhead rate per DLH

House Cleaning Based on 25k mil Based on 15k DLH Travel Variable costs: Supplies ($3.30 per DLH) Fuel ($0.80 per mile) Fixed costs: Indirect labor Depreciation Other 49,500 20,000 40,000 10,000 70,000$ 35,000 20,000 24,500 129,000 Total budgeted costs *(to support capacity of 30k miles driven and 20k DLHs)