Elie Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial dents. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service Twenty employees worked a total of 35,000 hours last year, 22.000 on residential jobs and 13,000 on commercial jobs. Wages were $10 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is allocated on the basis of labor hours worked, which is also the basis for customer charges. Because of increased competition for commercial accounts, ELSP can charge $37 per hour for residential work, but only $28 per hour for commercial work Required: a. If overhead for the year was $132.500, what were the profits of the residential and the commercial services using labor hours as the location base? (Do not round intermediate calculations.) Profit b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental and using supplies, which can be traced as follows Cost Cost Driver Volume Commercial Residential Activity Traveling Using equipment Using supplies Total overhead Cost Driver Number of clients served Equipment hours Area serviced in squareyards 79.800 140.000 70.000 Recalculate profits for commercial and residential services based on these activity bases. Do not found intermediate calculatio Profit 2.50 points Elhe Lawn & Plowing (ELAP) is a lawn and now plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service Twenty employees worked a total of 35.000 hours last year, 22 000 on residential jobs and 13 000 on commercialjobs. Wages were $16 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is located on the basis of labor hours worked, which is also the basis for customer charges. Because of increased competition for commercial accounts, ELAP can charge $37 per hour for residential work, but only $28 per hour for commercial work. Required: a. If overhead for the year was $132.500, what were the profits of the residential and the commercial services using Inbor hours as the allocation base? (Do not round Intermediate calculations.) Commercial Resident b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental and using supplies, which can be traced as follows: Cost Driver Volume Commercial Residential Traveling Using equipment Using supplies Total overhead Cost Driver Number of clans served Equipment hours Ares serviced in square yards 35 510 70 300 140.000 70,000 Recalculate profits for commercial and residential services based on these activity bases. Do not found intermediate calculation Commercial Residential
