Pushalong, Inc., is a lawn care service. The company originally specialized in serving residential clients but has recently started contracting for work with larger commercial clients. Mr. Weedly, the owner, is considering reducing residential services and increasing commercial lawn care. Five field employees worked a total of 11,000 hours last year7,000 on residential jobs and 4,000 on commercial jobs. Wages were $10.00 per hour for all work done. Direct materials used were minimal and are included in overhead. All overhead is allocated on the basis of labor hours worked, which is also the basis for customer charges. Because of greater competition for commercial accounts, Mr. Weedly can charge $17.50 per hour for residential work, but only $16.00 per hour for commercial work. Required: a. If overhead for the year was $64,000, what were the profits of commercial and residential service using labor hours as the allocation base? b. Overhead consists of office supplies, garden supplies, and depreciation and maintenance on equipment. These costs can be traced to the following activities: Cost $15,000 Activity Level Commercial Residential 16 44 Activity Cost Driver Office Supplies Number of Clients Served Equipment Depreciation Equipment Hours & Maintenance Garden Supplies Area Covered (sq yds) Total Overhead 20,000 6,500 4.000 29,000 70,000 30,000 $64,000 Recalculate profits for commercial and residential services based on these activity bases. (Show your work) c. What are the major differences between the costing methods? d. Explain why using drivers might help management make better decisions in pricing jobs? e. Should management use all three drivers, if not provide an explanation as to why they should or should not for each costs