Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector

image text in transcribed
image text in transcribed
image text in transcribed
Elite Lawn & Plowing (EL&P) is a lawn and snow 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 37,000 hours last year, 23,000 on residential jobs and 14,000 on commercialjobs. Wages were $13 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, EL&P can charge $36 per hour for residential work, but only $27 per hour for commercial work. Required: a. If overhead for the year was $109,260, what were the profits of the residential and commercial services using labor-hours as the allocation base? (Do not round intermediate calculations. Round final answers to the nearest whole dollar.) b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows Activity Traveling Using equipment Using supplies Total overhead Cost Driver Number of clients served Equipment hours Area serviced in square yards Cost $ 17,080 36,180 56,000 $109, 260 Cost Driver Volume Commercial Residential 16 3,500 1,800 110,000 50,000 Recalculate profits for commercial and residential services based on these activity bases. (Do not round intermediate calculations, Recalculate profits for commercial and residential services based on these activity bases. (Do not round intermediate calculations. Round final answers to the nearest whole dollar.) Commercial Residential Reverso Direct Labor Overhead Profit Total Overhead Profit b Recalculate profits for commercial and residential services bas Round final answers to the nearest whole dollar.) X Answer is complete but not entirely correct. . Revenue Direct Labor Overhead Profit Total Overhead Profit Commercial Residential $ 378,000 $ 828,000 182,000 299,000 41,300 X 67.850 X $ 154,700 X $ 461750 x $ 67.100 $ 42,160 $ 128,900 $ 486,840 b

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

An Audit Is An Audit Is An Audit

Authors: Marina Peters

1st Edition

B08B37VNZ6, 979-8652328412

More Books

Students also viewed these Accounting questions

Question

Is conflict always unhealthy? Why or why not? (Objective 4)

Answered: 1 week ago