Sal Amato operates a residential landscaping business in an affluent suburb of St. Louis. In an effort to provide quality service, he has concentrated solely on the design and installation of upscale landscaping plans (e.g, trees, shrubs, fountains, and lighting). With his clients continually requesting additional services, Sal recently expanded into lawn maintenance, including fertilization The following data relate to his first year's experience with 59 fertilization clients: Each client required six applications throughout the year and was billed $44.00 per application. Two applicatio ll fertili lype I fertilizer, which contains a special ingredient for weed control. The remaining four applications Sal ased 6,600 pounds of Type I fertilizer at $0.53 per pound and 11,600 pounds of Type II fertilizer at $0.43 per pound. Actual amounted to 5,620 pounds of Type I and 8,600 pounds of Type I. usa A new, part-time employee was hired to spread the fertilizer. Sal had to pay premium wages of $13.10 per hour because of a very tight labor market; the employee logged a total of 197 hours at client residences. Based on previous knowledge of the operation, articles in trade journals, and conversations with other landscapers, Sal established the following standards Fertilizer purchase price per pound: Type I, $0.66; Type II, $0.44 Fertilizer usage: 56 pounds per application Typical hourly wage rate of landscape personnel: $9.50 Labor time per application: 40 minutes The operation did not go as smoothly as planned, with customer complaints actually much higher than expected. Required: 1. Compute Sal's direct-material variances for each type of fertilizer. 2. Compute the direct-labor variances. Comput next year) 3-b. Calculate the profit or loss of Sal's new lawn fertilization service 4. On the basis of the variances that you computed in parts (1) and (2) was the new service a success from an overall cost-control actual client applications. (Note: Exclude fertilizer inventory, as remaining fertilizer be used st 5. Should the fertilizer service be continued next year? Sal Amato operates a residential landscaping business in an affluent suburb of St. Louis. In an effort to provide quality service, he has concentrated solely on the design and installation of upscale landscaping plans (e.g, trees, shrubs, fountains, and lighting). With his clients continually requesting additional services, Sal recently expanded into lawn maintenance, including fertilization The following data relate to his first year's experience with 59 fertilization clients: Each client required six applications throughout the year and was billed $44.00 per application. Two applicatio ll fertili lype I fertilizer, which contains a special ingredient for weed control. The remaining four applications Sal ased 6,600 pounds of Type I fertilizer at $0.53 per pound and 11,600 pounds of Type II fertilizer at $0.43 per pound. Actual amounted to 5,620 pounds of Type I and 8,600 pounds of Type I. usa A new, part-time employee was hired to spread the fertilizer. Sal had to pay premium wages of $13.10 per hour because of a very tight labor market; the employee logged a total of 197 hours at client residences. Based on previous knowledge of the operation, articles in trade journals, and conversations with other landscapers, Sal established the following standards Fertilizer purchase price per pound: Type I, $0.66; Type II, $0.44 Fertilizer usage: 56 pounds per application Typical hourly wage rate of landscape personnel: $9.50 Labor time per application: 40 minutes The operation did not go as smoothly as planned, with customer complaints actually much higher than expected. Required: 1. Compute Sal's direct-material variances for each type of fertilizer. 2. Compute the direct-labor variances. Comput next year) 3-b. Calculate the profit or loss of Sal's new lawn fertilization service 4. On the basis of the variances that you computed in parts (1) and (2) was the new service a success from an overall cost-control actual client applications. (Note: Exclude fertilizer inventory, as remaining fertilizer be used st 5. Should the fertilizer service be continued next year
