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Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following formulas: Grooming supplies (variable) = $0+ $4x Direct labor (variable)
Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following formulas: Grooming supplies (variable) = $0+ $4x Direct labor (variable) $0+ $14x Overhead (mixed) = $9,100+ $1x Milo, the owner, has determined that direct labor is the cost driver for all three categories of costs. Rensing Groomers Flexible Budget Activity Level: Direct labor hours 510 600 670 Variable costs: Grooming Supplies $2,040.00 $2,400.00 $2,680.00 Direct labor $7,140.00 $8,400.00 $9,380.00 Overhead $510.00 $600.00 $670.00 Total variable costs $9,690.00 $11,400.00 $12,730.00 Fixed Costs: Overhead $9,100.00 $9,100.00 $9,100.00 Total Fixed costs $9,100.00 $9,100.00 $9,100.00 Total Costs $18,790.00 $20,500.00 $21,830.00 (c) Calculate the total cost per direct labor hour at each of the activity levels specified in part (a). (Round answers to 2 decimal places, e.g. 10.25.) Activity level 1 $ Activity level 2 $ Activity level 3 $ (d) The groomers at Rensing normally work a total of 650 direct labor hours during each month. Each grooming job normally takes a groomer 1.30 hours. Milo wants to earn a profit equal to 40% of the costs incurred. Determine what he should charge each pet owner for grooming. (Round answer to 2 decimal places, e.g. 10.25.) Charge per client $
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