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

Grooming supplies (variable)		y	=	$0 + $3x
Direct labor (variable)		y	=	$0 + $12x
Overhead (mixed)		y	=	$10,600 + $2x

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

Prepare a flexible budget for activity levels of 550, 590, and 680 direct labor hours.

(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 30% 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

$

RENSING GROOMERS Flexible Budget