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Elite Lawn & Plowing (ELAP) is a lawn and snow plowing service with both residential and commercial clents. The owner beleves 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. Al overhead is allocated on the basis of labor-hours worked, which is also the basis for customer charges. Because of increased compettion for commercial accounts, ELSP can charge $60 per hour for residential work, but only $45 per hour for commercial work Required: af overmead for the year was $205.000, what were the profits of the residential and commercial services using labor-hours as the alocation base? b. Overhead consists of costs of traveling to the site, using equipment (including vehicle renta and using supplies, which can be traced as follows. Cost Driver Volune Commerei4l eaidential Activity Treveling Caing equipnent Uing supplies Total overhead Cost briver Cost $25,000 60,000 120,000 Sutber of elients served 24 1,715 65,000 76 1,225 35,000 qaipnent hours Area serviced in square yards s20s.000 Recalculate profits for commercial and residential services besed on these activity bases. (Round intermediate calculations to 2 decimal places) Commercial Residential Rovenue Direct Labor Overhead Proft Tota Overhead Proft

Elite Lawn & Plowing (ELAP) is a lawn and snow plowing service with both residential and commercial clents. The owner beleves 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. Al overhead is allocated on the basis of labor-hours worked, which is also the basis for customer charges. Because of increased compettion for commercial accounts, ELSP can charge $60 per hour for residential work, but only $45 per hour for commercial work Required: af overmead for the year was $205.000, what were the profits of the residential and commercial services using labor-hours as the alocation base? b. Overhead consists of costs of traveling to the site, using equipment (including vehicle renta and using supplies, which can be traced as follows. Cost Driver Volune Commerei4l eaidential Activity Treveling Caing equipnent Uing supplies Total overhead Cost briver Cost $25,000 60,000 120,000 Sutber of elients served 24 1,715 65,000 76 1,225 35,000 qaipnent hours Area serviced in square yards s20s.000 Recalculate profits for commercial and residential services besed on these activity bases. (Round intermediate calculations to 2 decimal places) Commercial Residential Rovenue Direct Labor Overhead Proft Tota Overhead Proft

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...
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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.
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 overmead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the b. Overhead consists of costs of traveling to the site, using equipment (including vehicle renta), and using supples, which can be allocation base? traced as follows. Cont Driver Volume CommercialResidential Activity Traveling Cost Driver Cost tumber of clients served $25,000 Equipnent hours Area serviced in square yards 24 1,775 65,000 1,225 35,000 Cing equipnent 60,000 Using supplies 120.000 overhead $205,000 Recalculate profits for commercial and residential services besed on these activity bases. (Round Intermediate calculations to 2 decimal places.) Commercial Residential Rovenue Direct Labor Overhead Proft D. Total Overhead Proft
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 overmead for the year was $205,000, what were the profits of the residential and commercial services using labor-hours as the b. Overhead consists of costs of traveling to the site, using equipment (including vehicle renta), and using supples, which can be allocation base? traced as follows. Cont Driver Volume CommercialResidential Activity Traveling Cost Driver Cost tumber of clients served $25,000 Equipnent hours Area serviced in square yards 24 1,775 65,000 1,225 35,000 Cing equipnent 60,000 Using supplies 120.000 overhead $205,000 Recalculate profits for commercial and residential services besed on these activity bases. (Round Intermediate calculations to 2 decimal places.) Commercial Residential Rovenue Direct Labor Overhead Proft D. Total Overhead Proft
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