Earth and Artistry, Inc provides commercial landscaping services Sasha Cairns, the firms owner, wants to develop cost estimates that she can use to prepare bids on jobs After analyzing the firms costs, Cairns has developed the following preliminary cost estimates for each 1,000 square feet of landscaping Direct material $ 390 Direct labor (5 direct labor hours at $10 per hour) 50 Overhead (at $16 per direct labor hour) 80 Total cost per 1,000 square feet $ 520 Cairns is quite certain about the estimates for direct material and direct labor However, she is not as comfortable with the overhead estimate The estimate for overhead is based on the overhead costs that were incurred during the past 12 months as presented in the following schedule The estimate of $16 per direct labor hour was determined by dividing the total overhead costs for the 12 month period ($624,000) by the total direct labor hours (39,000) Regular Direct Overtime Direct Total Direct Total Overhead Labor Hours Labor Hours Labor Hours January $ 52,000 2,950 200 3,150 February 47,000 2,760 30 2,790 March 47,000 3,490 50 3,540 April 53,000 2,470 260 2,730 May 51,000 2,950 410 3,360 June 58,000 3,420 720 4,140 July 60,000 3,410 610 4,020 August 50,000 3,410 290 3,700 September 53,000 2,510 70 2,580 October 47,000 2,700 30 2,730 November 49,000 2,570 40 2,610 December 57,000 3,390 260 3,650 Total $ 624,000 36,030 2,970 39,000 The overtime premium is 50 percent of the direct labor wage rate Cairns believes that overhead is affected by total monthly direct labor hours Cairns decided to perform a least squares regression of overhead (OH) on total direct labor hours (DLH) The following regression formula was obtained OH $36,363 $4 81 DLH Required Using the overhead formula that was derived from the least squares regression, determine a total variable cost estimate for each 1,000 square feet of landscaping Cairns has been asked to submit a bid on a landscaping project for the city government consisting of 62,000 square feet Cairns estimates that 60 percent of the direct labor hours required for the project will be on overtime Calculate the incremental costs that should be included in any bid that Cairns would submit on this project Use the overhead formula derived from the least squares regression After attending a seminar on activity based costing, Cairns decided to further analyze the companys activities and costs She discovered that a more accurate portrayal of the firms cost behavior could be achieved by dividing overhead into three separate pools, each with its own cost driver Separate regression equations were estimated for each of the cost pools, with the following results OH 1 $10,900 $4 50 DLH, where DLH denotes direct labor hours OH 2 $9,300 $12 50 SFS, where SFS denotes the number of square feet of turf seeded (in thousands) OH 3 $7,900 $6 30 PL, where PL denotes the number of individual plantings (e g , trees and shrubs) Assume that 5 direct labor hours will be needed to landscape each 1,000 square feet, regardless of the specific planting material used a Suppose the landscaping project for the city will involve seeding all 62,000 square feet of turf and planting 90 trees and shrubs Calculate the incremental variable overhead cost that Cairns should include in the bid b Recompute the incremental variable overhead cost for the citys landscaping project assuming half of the 62,000 square foot landscaping area will be seeded and there will be 280 individual plantings The plantings will cover the entire 62,000 square foot area Complete this question by entering your answers in the tabs below Req 5A Req 2 Req 3 Req 5B Cairns has been asked to submit a bid on a landscaping project for the city government consisting of 62,000 square feet Cairns estimates that 60 percent of the direct labor hours required for the project will be on overtime Calculate the incremental costs that should be included in any bid that Cairns would submit on this project Use the overhead formula derived from the least squares regression (Do not round intermediate calculations Round your final answer to 2 decimal places ) Show less Minimum bid Req 2 Req 5A Complete this question by entering your answers in the tabs below Req 5A Req 2 Req 3 Req 5B Suppose the landscaping project for the city will involve seeding all 62,000 square feet of turf and planting 90 trees and shrubs Calculate the incremental variable overhead cost that Cairns should include in the bid (Do not round intermediate calculations and round your final answer to 2 decimal places ) Total incremental variable overhead Req 5B

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Earth and Artistry, Inc. provides commercial landscaping services. Sasha Cairns, the firms owner, wants to develop cost estimates that she can use to prepare bids

Earth and Artistry, Inc. provides commercial landscaping services. Sasha Cairns, the firms owner, wants to develop cost estimates that she can use to prepare bids on jobs. After analyzing the firms costs, Cairns has developed the following preliminary cost estimates for each 1,000 square feet of landscaping.


Direct material	$	390
Direct labor (5 direct-labor hours at $10 per hour)		50
Overhead (at $16 per direct-labor hour)		80
Total cost per 1,000 square feet	$	520

Cairns is quite certain about the estimates for direct material and direct labor. However, she is not as comfortable with the overhead estimate. The estimate for overhead is based on the overhead costs that were incurred during the past 12 months as presented in the following schedule. The estimate of $16 per direct-labor hour was determined by dividing the total overhead costs for the 12-month period ($624,000) by the total direct-labor hours (39,000).

			Regular Direct-	Overtime Direct-	Total Direct-
	Total Overhead		Labor Hours	Labor Hours*	Labor Hours
January	$	52,000	2,950	200	3,150
February		47,000	2,760	30	2,790
March		47,000	3,490	50	3,540
April		53,000	2,470	260	2,730
May		51,000	2,950	410	3,360
June		58,000	3,420	720	4,140
July		60,000	3,410	610	4,020
August		50,000	3,410	290	3,700
September		53,000	2,510	70	2,580
October		47,000	2,700	30	2,730
November		49,000	2,570	40	2,610
December		57,000	3,390	260	3,650
Total	$	624,000	36,030	2,970	39,000

*The overtime premium is 50 percent of the direct-labor wage rate.

Cairns believes that overhead is affected by total monthly direct-labor hours. Cairns decided to perform a least-squares regression of overhead (OH) on total direct-labor hours (DLH). The following regression formula was obtained. OH = $36,363 + $4.81 DLH

Required:

Using the overhead formula that was derived from the least-squares regression, determine a total variable-cost estimate for each 1,000 square feet of landscaping.
Cairns has been asked to submit a bid on a landscaping project for the city government consisting of 62,000 square feet. Cairns estimates that 60 percent of the direct-labor hours required for the project will be on overtime. Calculate the incremental costs that should be included in any bid that Cairns would submit on this project. Use the overhead formula derived from the least-squares regression.

After attending a seminar on activity-based costing, Cairns decided to further analyze the companys activities and costs. She discovered that a more accurate portrayal of the firms cost behavior could be achieved by dividing overhead into three separate pools, each with its own cost driver. Separate regression equations were estimated for each of the cost pools, with the following results.

OH₁ = $10,900 + $4.50 DLH, where DLH denotes direct-labor hours OH₂= $9,300 + $12.50 SFS, where SFS denotes the number of square feet of turf seeded (in thousands) OH₃ = $7,900 + $6.30 PL, where PL denotes the number of individual plantings (e.g., trees and shrubs) Assume that 5 direct-labor hours will be needed to landscape each 1,000 square feet, regardless of the specific planting material used.

a. Suppose the landscaping project for the city will involve seeding all 62,000 square feet of turf and planting 90 trees and shrubs. Calculate the incremental variable overhead cost that Cairns should include in the bid.

b. Recompute the incremental variable overhead cost for the citys landscaping project assuming half of the 62,000-square-foot landscaping area will be seeded and there will be 280 individual plantings. The plantings will cover the entire 62,000-square-foot area.

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Complete this question by entering your answers in the tabs below. Req 5A Req 2 Req 3 Req 5B Cairns has been asked to submit a bid on a landscaping project for the city government consisting of 62,000 square feet. Cairns estimates that 60 percent of the direct-labor hours required for the project will be on overtime. Calculate the incremental costs that should be included in any bid that Cairns would submit on this project. Use the overhead formula derived from the least-squares regression. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Show less Minimum bid Req 2 Req 5A Complete this question by entering your answers in the tabs below Req 5A Req 2 Req 3 Req 5B Suppose the landscaping project for the city will involve seeding all 62,000 square feet of turf and planting 90 trees and shrubs. Calculate the incremental variable overhead cost that Cairns should include in the bid. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Total incremental variable overhead Req 5B