Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

We-Clean, Inc., is a home-cleaning service. It originally specialized in serving small residential clients but recently started contracting for work in large apartment and office

We-Clean, Inc., is a home-cleaning service. It originally specialized in serving small residential clients but recently started contracting for work in large apartment and office buildings. Julie Lodge, the owner, believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty cleaning employees worked a total of 33,000 hours last year, 22,000 on residential jobs and 11,000 on commercial jobs. Wages were $16 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is allocated on the basis of labor-hours worked, which is also the basis for customer charges. Because of increased competition for commercial accounts, Julie can charge $36 per hour for residential work, but only $27 per hour for commercial work. Required: (a) If overhead for the year was $125,578, what were the profits of the commercial and the residential services using labor-hours as the allocation base? (Do not round intermediate calculations. Round "Profit" to the nearest whole dollar.) (b) Overhead consists of costs of traveling, using equipment, and using supplies, which can be traced as follows: Cost Driver Volume Activity Cost Driver Cost Commercial Residential Traveling Number of clients served $ 16,758 15 48 Using equipment Equipment hours 34,720 3,600 2,000 Using supplies Area serviced in square yards 74,100 130,000 60,000 Total overhead $ 125,578 Recalculate profits for commercial and residential services based on these activity bases. (Do not round intermediate calculations. Round "Profit" to the nearest whole dollar.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Accounting questions

Question

When would you classify an investment as available-for-sale (AFS)?

Answered: 1 week ago

Question

boolean algebra identities ( xyz ) ' = x ' + y ' + z '

Answered: 1 week ago