Need help with A,B and C. This is one whole problem so kindly skip if you are unable to answer A,B and C. Thank you :)

Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following equations:

Grooming supplies (variable) . y = $0 + $5x

Direct labor (variable) .. y = $0 + $14x

Overhead (mixed) y = $10,000 + $1x

(Note that data above summary is: $20 in total VAR (5x + 14x + 1x) and $10k in FXD costs

Milo, the owner, has determined that direct labor is the cost driver for all three categories of costs.

Instructors Note: Above Y = translated for us math-challenged. Grooming supplies and Direct Labor means there is -0- fixed $$ but the variable cost is $5 times the activity. OH has Fxd and Var components. $10,000 fixed plus a variable part of ($1 times the activity level).

Instructions

(a) Prepare a flexible budget for activity levels of 550, 600, and 700 direct labor hours.

(b) Calculate total cost per direct labor hour for each of the activity levels, 550, 600 and 700.

(c) The groomers at Rensing normally work a total of 650 direct labor hours during each month. Each grooming job normally takes a groomer 1.3 hours. Milo wants to earn a profit equal to 40% of the costs incurred. Determine what he should charge each pet owner for grooming.

(a)

Activity Level Direct Labor Hours	550	600	700
Variable Costs:
Grooming Supplies
Direct Labor
Overhead
Total Variable Costs
Fixed Costs:
Overhead
Total Costs

(b)

Var $ Cost (above)	Divided by Activity Levels	=	Cost per Direct Labor Hour
	550	=
	600	=
	700	=

(c) (FYI: this calculation uses no answers from either (a) or (b)

Here is one way to get the answer to (c):

1st Calculate the total cost which is the Fxd $ + Var $ meaning ($10,000 + ($20 x DLH)

2nd ... Calculate the number of clients: 650 DLH / 1.3 DLH ea grooming job = # clients.

3rd Total cost (1st answer) divided by # clients (2nd answer) = cost per client.

4th Cost per client plus 40% markup means (3rd answer x 1.40) = Charge per client.

Charge per client