Question
Caliban's Cleaning provides specialized cleaning services for clothes, apholstry, and other household miscellany. The company created a Static Planning Budget based on the expenses below,
Caliban's Cleaning provides specialized cleaning services for clothes, apholstry, and other household miscellany. The company created a Static Planning Budget based on the expenses below, 2,000 budgeted direct labor hours during the month, and revenue of $282 per direct labor hour for cleaning services.
Caliban's has noticed that direct labor hours may not be the only cost driver within the organization and has decided to add the number of Customers as an additional driver into the flexible budget in order to better account for cost behaviors during the month. This change has been reflected in the expense information below.
Expenses | Fixed Costs | Variable Costs per Hour | Variable Costs per Customer |
Wages and Salaries | $8,619 | $139.5 per hour | -- |
Supplies | $243 | $3.5 per hour | $19.4 per customer |
Equipment Lease | $1,832 | $29.11 per hour | -- |
Insurance | $3,476 | $4.78 per hour | $4.62 per customer |
Miscellaneous | $538 | $2.06 per hour | $7.66 per customer |
Due to this change, the management feels it should be able to charge an additional flat fee of $32 per customer for an additional boost to revenue. If the company used 2,099 hours and serviced 219 customers, what would be the Net Operating Income (NOI) on the Flexible Budget for the month? Round your answer to the nearest whole dollar. You do not need to designate this as favorable or unfavorable, just provide NOI as it is on the Flexible Budget.
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