Charlton Associates prepares architectural drawings to conform to local structural-safety codes. (Click the loan to view the income statement) (Click the loon 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 requirements 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 briefly. What actions can Charlton 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 Added Area Non-value Added Total Making calculations and preparing drawings Checking calculations and drawings Correcting errors found in drawings Making changes in response to client requests cos Requirements - X total cost drav gs gs lient r 1. How much of the total costs in 2017 are value-added, non-value-added, or in the gray area between? Explain your answers briefly. What actions can Charlton take to reduce its costs? 2. What are the consequences of misclassifying a non-value-added cost as a value-added cost? When in doubt, would you classify a cost as a value-added or non-value-added cost? Explain briefly. 3. Suppose Charlton could eliminate all errors so that it did not need to spend any time making corrections and, as a result, could proportionately reduce professional-labor costs. Calculate Charlton's operating income for 2017. 4. Now suppose Charlton could take on as much business as it could complete, but it could not add more professional staff. Assume Charlton could eliminate all errors so that it does not need to spend any time correcting errors. Assume Charlton could use the time saved to increase revenues proportionately. Assume travel costs will remain at $19,000. Calculate Charlton's operating income for 2017. ctic ur. ges ary w Data table Its income statement for 2017 is as follows: - What sts in 2 $ 718,960 Revenues Round then ca Salaries of professional staff (7,600 hours x $54 per hour) 410,400 Travel 19,000 176,472 gs Administrative and support costs Total costs Operating income 605,872 $ 113,088 quests Get Print Done sts var Data table costs sts, ther The percentage of time spent by professional staff on various activities follows: Making calculations and preparing drawings for clients Checking calculations and drawings awings Correcting errors found in drawings (not billed to clients) Making changes in response to client requests (billed to clients) Correcting own errors regarding building codes (not billed to clients) Total reques Print Done - X What action 78% 3. und your a 65 8 100%