Which is correct? #1 (200000+76000+178450)/(1750*6) 454450/10500=43.28

or

(50000+38000+178450)/(1750*6) 266450/10500=28.38

2 Single versus Multiple Overbead Application Rates ILO3. LOS Foster Appliance Repait has developed a reputation over many years of providing high-qual ity reliable repair services at a fair price. The company has grown from a two-person opera tion (run by Victor Foster and his wife Sally Jones) to a much larger company employing Foster and Jones as well as four skilled repair personnel and two service technicians jonei manages the front office and prepares all accounting-related records for the compaay Recently, Jones has noticeddecline in profits generated by the repair business. Foster had also noticed some decline in the number of repairs conmpleted over the past few months. He believes this reductioe may be due to increased competition from a new repair shop in the area. Since pricing is based to a large degree on the cost of repairs. Foster asked jones to spend some time analyzing how repair costs were charged to jobs to better understand the problem. He was quick to remind Jones that he was committed to keeping all personnel on flxed salaries since he believes this allows him to keep good employees and encourages loyalty to the company Jones collected the following information about the costing system: Direct materials used in repairs are charged directly to the job. The four r cians are paid a fixed salary of $38.000 per year. Jones estimates that each of the six repoin personnel works 1750 hours per year on customer jobs Other budgeted indirect support costs for the year le.g. rent, insurance, utilities suppli repair van maintenance repair van depreciation total $178450. including Fosters and Jones's salaries The price for each job is cakculated on a cost-plus basis, Customers pay the total cost bo complete the job plus a markup of 10% The total cost for each job is calculated as follaws total direct material cost plus the 3h rate" number of repair hours to complete the job Tho hop rate is applied to all typ repalr jobs. The shop rate is calculated as the sum of the repair personnel salar budgeted indirect suppart costs for the year divided by the estimated total hours t worked on customer jobs for the year Jones noted that about 65% of total indirect costs related to complex repairs over the last couple of years, while the other 35% of total indirect costs related to simpler repairs Even so about half of the total time worked on custotmer jobs by repair personnel and techni cians was related to complex repairs while the other half was related to simple repairs While Jones believed this was important information. she realized it was not taken into account when calculating the overall shop rate for the year . ir personnel are paid a fixed salary of s50000 per year, and the two techni Required D Calculate the shop rate for the year based on the above information gathered by lones 2 Use the information gathered by Jones about the proportion of complex and simple r pairs each year to calculate different shop rates that could be applied to compl simple repair work 3. Consider Job 1246 completed by Foster Appliance Repair last month. The job co indicates $115 cost of direct materials plus 6 hours of labour time x the shop rate. Calculate the total price charged to the customer assuming By doing a little more digging jones was able to determine that 2 of the 6 hours spem on Job 1246 were related to complex tepairs. while 4 of the 6 hours spent on the job were related to simple repairs. Use this in in (2) above to estimate the price that would have been charged for Job 1246 under this new system. a. 10% markup on cost formation and the two shop rates calculated ng all of the information gathered to this point. explain why Foster Appliance Repai may be-selling fewer-repairs, resulting in lower profitability