Homework Help is Here – Start Your Trial Now!
Business
Accounting
Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty employees worked a total of 20,000 hours last year, 13,000 on residential jobs and 7,000 on commercial jobs. Wages were $25 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, EL&P can charge $60 per hour for residential work, but only $45 per hour for commercial work. Required: a. If overhead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the allocation base? b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows. Cost Driver Volume Commercial Residential 76 Activity Traveling Using equipment Using supplies Cost $ 25,000 60,000 120,000 $205,000 Cost Driver Number of clients served 24 Equipment hours Area serviced in square yards 1,775 65,000 1,225 35,000 Total overhead

Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty employees worked a total of 20,000 hours last year, 13,000 on residential jobs and 7,000 on commercial jobs. Wages were $25 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, EL&P can charge $60 per hour for residential work, but only $45 per hour for commercial work. Required: a. If overhead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the allocation base? b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows. Cost Driver Volume Commercial Residential 76 Activity Traveling Using equipment Using supplies Cost $ 25,000 60,000 120,000 $205,000 Cost Driver Number of clients served 24 Equipment hours Area serviced in square yards 1,775 65,000 1,225 35,000 Total overhead

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter17: Activity Resource Usage Model And Tactical Decision Making
Section: Chapter Questions
Problem 32P: Paladin Company manufactures plain-paper fax machines in a small factory in Minnesota. Sales have...
See similar textbooks
icon
Related questions
Question

Hello question is attached, thanks.

Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty employees worked a total of 20,000 hours last year, 13,000 on residential jobs and 7,000 on commercial jobs. Wages were $25 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, EL&P can charge $60 per hour for residential work, but only $45 per hour for commercial work. Required: a. If overhead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the allocation base? b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows. Cost Driver Volume Commercial Residential 24 Activity Traveling Using equipment Using supplies Cost Driver Number of clients served Cost $ 25,000 60,000 120,000 $205,000 76 Equipment hours Area serviced in square yards 1,775 65,000 1,225 35,000 Total overhead
Transcribed Image Text:Elite Lawn & Plowing (EL&P) is a lawn and snow plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty employees worked a total of 20,000 hours last year, 13,000 on residential jobs and 7,000 on commercial jobs. Wages were $25 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, EL&P can charge $60 per hour for residential work, but only $45 per hour for commercial work. Required: a. If overhead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the allocation base? b. Overhead consists of costs of traveling to the site, using equipment (including vehicle rental), and using supplies, which can be traced as follows. Cost Driver Volume Commercial Residential 24 Activity Traveling Using equipment Using supplies Cost Driver Number of clients served Cost $ 25,000 60,000 120,000 $205,000 76 Equipment hours Area serviced in square yards 1,775 65,000 1,225 35,000 Total overhead
Recalculate profits for commercial and residential services based on these activity bases. (Round intermediate calculations to 2 decimal places.) Commercial Residential a. Revenue Direct Labor Overhead Profit b. Total Overhead Profit
Transcribed Image Text:Recalculate profits for commercial and residential services based on these activity bases. (Round intermediate calculations to 2 decimal places.) Commercial Residential a. Revenue Direct Labor Overhead Profit b. Total Overhead Profit
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Knowledge Booster
Initial Public Offering (IPO)
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Cornerstones of Cost Management (Cornerstones Ser…
Cornerstones of Cost Management (Cornerstones Ser…
Accounting
ISBN:
9781305970663
Author:
Don R. Hansen, Maryanne M. Mowen
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Managerial Accounting: The Cornerstone of Busines…
Managerial Accounting: The Cornerstone of Busines…
Accounting
ISBN:
9781337115773
Author:
Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:
Cengage Learning
Principles of Cost Accounting
Principles of Cost Accounting
Accounting
ISBN:
9781305087408
Author:
Edward J. Vanderbeck, Maria R. Mitchell
Publisher:
Cengage Learning
Financial And Managerial Accounting
Financial And Managerial Accounting
Accounting
ISBN:
9781337902663
Author:
WARREN, Carl S.
Publisher:
Cengage Learning,
Managerial Accounting
Managerial Accounting
Accounting
ISBN:
9781337912020
Author:
Carl Warren, Ph.d. Cma William B. Tayler
Publisher:
South-Western College Pub
SEE MORE TEXTBOOKS