Question
elite lawn and plowing is a lawn and snow plowing service with both residential and commercial client. the owner believes that the commercial sector has
elite lawn and plowing is a lawn and snow plowing service with both residential and commercial client. the owner believes that the commercial sector has more growth opportunities and is considering dropping the residential services
20 employees work a total of 44,000 hours last year 29,000 on residential jobs and 15,000 on commercial jobs. wages were $16 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 of customer charges because of increased competition for commercial accounts EL&P can charge $35 per hour for residential work but only $29 per hour for commercial work
- if overhead for the year was 124,590 what were the profits of the residential and Commercial Services using labor hours as the allocation base
- overhead consists of costs of traveling to the site using equipment including vehicle rental and using supplies which can be traced as follower
commercial residential
traveling number of clients served 17,010 18 45
using equipment equipment hours 33,480 3100 2300
using supplies area service in square yards 74,100 110,000 80,000
total overhead 124,590
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