Calvert

Calvert Associates prepares architectural drawings to conform to local?structural-safety codes.

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?(Click the icon to view the income?statement.)LOADING...

?(Click the icon to view the percentage of time spent on?activities.)

Assume administrative and support costs vary with?professional-labor costs. Consider each requirement independently.

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Requirement 1. How much of the total costs in 2017

2017 are?value-added, non-value-added, or in the gray area?between? Explain your answers briefly. What actions can Calvert

Calvert take to reduce its?costs?

Begin by calculating the total labor?costs, then calculate the total costs. ?(If a box is not used in the?table, leave the box?empty; do not enter a zero. Round your answers to the nearest whole?dollar.)

Value-

Gray

Non-value

Added

Area

-Added

Total

Making calculations and preparing drawings

$

300,300

$

300,300

Checking calculations and drawings

11,700

Correcting errors found in drawings

31,200

Making changes in response to client requests

19,500

19,500

Correcting errors to meet government building code

27,300

Total professional labor costs

319,800

390,000

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Data Table

Calvert Associates prepares architectural drawings to conform to local structural-safety codes. E (Click the icon to view the income statement.) a (Click the icon to view the percentage of time spent on activities.) Assume administrative and support costs vary with professional-labor costs. Consider each requirement independently. Read the @uirements. Requirement 1. How much of the total costs in 2017 are value-added, non-value-added, or in the gray area between? Explain your answers briey. What actions can Calvert take to reduce its costs? Begin by calculating the total labor costs, then calculate the total costs. (If a box is not used in the table, leave the box empty; do not enter a zero. Round your answers to the nearest whole dollar.) Value- Gray Non-value Added Area -Added Total Making calculations and preparing drawings $ 300.300 $ 300.300 Checking calculations and drawings I I 11,700 Correcting errors found in drawings 31,200 Making changes in response to client requests 19.500 19.500 Correcting errors to meet government building code 27500 Total professional labor costs 319.800 390.000 Its income statement for 2017 is as follows: Revenues Salaries of professional staff (7,500 hours at $52 per hour) Travel Administrative and support costs Total costs Operating income 701,250 390,000 15,000 171,600 576,600 124,650 The percentage of time spent by professional staff on various activities follows: Making calculations and preparing drawings for clients 77 % Checking calculations and drawings 3 Correcting errors found in drawings (not billed to clients) 8 Making changes in response to client requests (billed to clients) 5 7 Correcting own errors regarding building codes (not billed to clients) Total