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eldt Cleaning Services (HCS) is a local stodi service company serving both the resi considering dropping the commercial clients because that business seems only marginally profitable. Twenty-five employees worked a total of 40,500 hours last year, 27,000 on commercial jobs and 13,500 on residential jobs. Wages were $20 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. Given current economic conditions and competition, HCS bills residential clients $40 per hour and commercial clients $30 per hour. Required: a. If overhead for the year was $363,300, what were the profits of the residential and commercial services using labor-hours as the allocation base? Note: Do not round intermediate calculations. Round final answers to the nearest whole dollar. b. Overhead consists of costs of supervision, equipment used (including vehicle rental), and supplies used, which can be traced as follows: Activity Supervision Equipment depreciation and lease Miscellaneous supplies Total overhead mmercial markets. The owner Cost Driver Number of clients served Equipment hours Area serviced in square yards a. Revenue a. Direct Labor a. Overhead a. Profit b. Total Overhead b. Profit Cost $ 44,100 168,000 151, 200 $363,300 Commercial Residential Recalculate total overhead and profits for commercial and residential services based on these activity bases. Note: Round intermediate calculations to 2 decimal places. Cost Driver Volume Commercial 20 3,000 76,000 Residential 64 2,000 36,000

eldt Cleaning Services (HCS) is a local stodi service company serving both the resi considering dropping the commercial clients because that business seems only marginally profitable. Twenty-five employees worked a total of 40,500 hours last year, 27,000 on commercial jobs and 13,500 on residential jobs. Wages were $20 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. Given current economic conditions and competition, HCS bills residential clients $40 per hour and commercial clients $30 per hour. Required: a. If overhead for the year was $363,300, what were the profits of the residential and commercial services using labor-hours as the allocation base? Note: Do not round intermediate calculations. Round final answers to the nearest whole dollar. b. Overhead consists of costs of supervision, equipment used (including vehicle rental), and supplies used, which can be traced as follows: Activity Supervision Equipment depreciation and lease Miscellaneous supplies Total overhead mmercial markets. The owner Cost Driver Number of clients served Equipment hours Area serviced in square yards a. Revenue a. Direct Labor a. Overhead a. Profit b. Total Overhead b. Profit Cost $ 44,100 168,000 151, 200 $363,300 Commercial Residential Recalculate total overhead and profits for commercial and residential services based on these activity bases. Note: Round intermediate calculations to 2 decimal places. Cost Driver Volume Commercial 20 3,000 76,000 Residential 64 2,000 36,000

FINANCIAL ACCOUNTING
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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Heidt Cleaning Services (HCS) is a local custodial service company serving both the residential and commercial markets. The owner is considering dropping the commercial clients because that business seems only marginally profitable. Twenty-five employees worked a total of 40,500 hours last year, 27,000 on commercial jobs and 13,500 on residential jobs. Wages were $20 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. Given current economic conditions and competition, HCS bills residential clients $40 per hour and commercial clients $30 per hour. Required: a. If overhead for the year was $363,300, what were the profits of the residential and commercial services using labor-hours as the allocation base? Note: Do not round intermediate calculations. Round final answers to the nearest whole dollar. b. Overhead consists of costs of supervision, equipment used (including vehicle rental), and supplies used, which can be traced as follows: Activity Supervision Equipment depreciation and lease Miscellaneous supplies Total overhead Cost Driver Number of clients served Equipment hours Area serviced in square yards a. Revenue a. Direct Labor a. Overhead a. Profit b. Total Overhead b. Profit Cost $ 44,100 168,000 151, 200 $363,300 Commercial Residential Cost Driver Volume Recalculate total overhead and profits for commercial and residential services based on these activity bases. Note: Round intermediate calculations to 2 decimal places. Commercial 20 3,000 76,000 Residential 64 2,000 36,000
Transcribed Image Text:Heidt Cleaning Services (HCS) is a local custodial service company serving both the residential and commercial markets. The owner is considering dropping the commercial clients because that business seems only marginally profitable. Twenty-five employees worked a total of 40,500 hours last year, 27,000 on commercial jobs and 13,500 on residential jobs. Wages were $20 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. Given current economic conditions and competition, HCS bills residential clients $40 per hour and commercial clients $30 per hour. Required: a. If overhead for the year was $363,300, what were the profits of the residential and commercial services using labor-hours as the allocation base? Note: Do not round intermediate calculations. Round final answers to the nearest whole dollar. b. Overhead consists of costs of supervision, equipment used (including vehicle rental), and supplies used, which can be traced as follows: Activity Supervision Equipment depreciation and lease Miscellaneous supplies Total overhead Cost Driver Number of clients served Equipment hours Area serviced in square yards a. Revenue a. Direct Labor a. Overhead a. Profit b. Total Overhead b. Profit Cost $ 44,100 168,000 151, 200 $363,300 Commercial Residential Cost Driver Volume Recalculate total overhead and profits for commercial and residential services based on these activity bases. Note: Round intermediate calculations to 2 decimal places. Commercial 20 3,000 76,000 Residential 64 2,000 36,000
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