P1. Wabash Company specializes in refurbishing exterior painted surfaces that have been hard hit by humidity and insect debris. It uses a special technique, called pressure cleaning, before priming and painting the surface. The refurbishing process involves the following steps: 1. Unskilled laborers trim all trees and bushes within two feet of the structure. 2. Skilled laborers clean the building with a high-pressure cleaning machine, using about 6 gallons of chlorine per job. 3. Unskilled laborers apply a coat of primer. 4. Skilled laborers apply oil-based exterior paint to the entire surface. On average, skilled laborers work 12 hours per job, and unskilled laborers work 8 hours. The refurbishing process generated the following operating results during the year on 500 jobs: $20 per hour $8 per hour Skilled labor Unskilled labor Gallons of chlorine used 3,000 gallons at $5.50 per gallon Paint primer 7,536 gallons at $15.50 per gallon 6,280 gallons at $16.00 per gallon Paint Depreciation of paint-spraying equipment $600 per month depreciation $800 per month total $421 per month Lease of two vans Rent on storage building

P1. Wabash Company specializes in refurbishing exterior painted surfaces that have been hard hit by humidity and insect debris. It uses a special technique, called pressure cleaning, before priming and painting the surface. The refurbishing process involves the following steps: 1. Unskilled laborers trim all trees and bushes within two feet of the structure. 2. Skilled laborers clean the building with a high-pressure cleaning machine, using about 6 gallons of chlorine per job. 3. Unskilled laborers apply a coat of primer. 4. Skilled laborers apply oil-based exterior paint to the entire surface. On average, skilled laborers work 12 hours per job, and unskilled laborers work 8 hours. The refurbishing process generated the following operating results during the year on 500 jobs: $20 per hour $8 per hour Skilled labor Unskilled labor Gallons of chlorine used 3,000 gallons at $5.50 per gallon Paint primer 7,536 gallons at $15.50 per gallon 6,280 gallons at $16.00 per gallon Paint Depreciation of paint-spraying equipment $600 per month depreciation $800 per month total $421 per month Lease of two vans Rent on storage building

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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In Principles of Accounting:

12th Edition

Belverd E. + 5 others

Publisher: Cengage Learning

ISBN: 9781133593102

Please answer part two.

Data on utilities for the year follow:
Month
Number of Jobs
Cost
Hours Worked
January
42
$ 3,950
840
February
37
3,550
740
March
44
4,090
880
April
May
49
4,410
980
54
4,720
1,080
June
62
5,240
1,240
July
71
5,820
1,420
August
September
73
5,890
1,460
63
5,370
1,260
October
48
4,340
960
November
45
4,210
900
December
40
3,830
800
Totals
628
$55,420
12,560
REQUIRED
1. Classify the costs as variable, fixed, or mixed.
2. Using the high-low method, separate mixed costs into their variable and fixed com-
ponents. Use total hours worked as the basis.
3. Compute the average cost per job for the year. (Hint: Divide the total of all costs
for the year by the number of jobs completed.) Use estimated hours to determine
utilities costs. (Round to two decimal places.)

Cost Behavior and Projection for a Service Business
P1. Wabash Company specializes in refurbishing exterior painted surfaces that have
been hard hit by humidity and insect debris. It uses a special technique, called pressure
cleaning, before priming and painting the surface. The refurbishing process involves the
following steps:
1. Unskilled laborers trim all trees and bushes within two feet of the structure.
2. Skilled laborers clean the building with a high-pressure cleaning machine, using
about 6 gallons of chlorine per job.
3. Unskilled laborers apply a coat of primer.
4. Skilled laborers apply oil-based exterior paint to the entire surface.
On average, skilled laborers work 12 hours per job, and unskilled laborers work 8 hours.
The refurbishing process generated the following operating results during the year on
500 jobs:
Skilled labor
$20 per hour
$8 per hour
3,000 gallons at $5.50 per gallon
Unskilled labor
Gallons of chlorine used
Paint primer
7,536 gallons at $15.50 per gallon
6,280 gallons at $16.00 per gallon
$600 per month depreciation
$800 per month total
$421 per month
Paint
Depreciation of paint-spraying equipment
Lease of two vans
Rent on storage building
(Continued)

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