Ever Clean Company provides gutter cleaning services to residential clients. The company has enjoyed considerable growth in recent years due to a successful marketing cam- paign and favorable reviews on service-rating Web sites. Ever Clean owner Joanne Clark makes sales calls herself and quotes on jobs based on length of gutter surface. Ever Clean hires college students to drive the company vans to jobs and clean the gutters. A part-time bookkeeper takes care of billing customers and other office tasks. Overhead is allocated based on direct labor-hours (DLH). Joanne Clark estimates that her gutter cleaners will work a total of 1,000 jobs during the year. Each job averages 600 feet of gutter surface and requires 12 direct labor-hours. Clark pays her gutter cleaners $15 per hour, inclusive of taxes and benefits. The following table presents the budgeted overhead costs for 2018: Variable costs $ 78,000 Supplies ($6.50 per DLH) Fixed costs (to support capacity of 12,000 DLH) 25,000 Indirect labor Depreciation 17,000 Other 24,000 Total budgeted costs $144,000

Ever Clean Company provides gutter cleaning services to residential clients. The company has enjoyed considerable growth in recent years due to a successful marketing cam- paign and favorable reviews on service-rating Web sites. Ever Clean owner Joanne Clark makes sales calls herself and quotes on jobs based on length of gutter surface. Ever Clean hires college students to drive the company vans to jobs and clean the gutters. A part-time bookkeeper takes care of billing customers and other office tasks. Overhead is allocated based on direct labor-hours (DLH). Joanne Clark estimates that her gutter cleaners will work a total of 1,000 jobs during the year. Each job averages 600 feet of gutter surface and requires 12 direct labor-hours. Clark pays her gutter cleaners $15 per hour, inclusive of taxes and benefits. The following table presents the budgeted overhead costs for 2018: Variable costs $ 78,000 Supplies ($6.50 per DLH) Fixed costs (to support capacity of 12,000 DLH) 25,000 Indirect labor Depreciation 17,000 Other 24,000 Total budgeted costs $144,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Question

Q.Calculate the budgeted operating income.

Ever Clean Company provides gutter cleaning services to residential
clients. The company has enjoyed considerable growth in recent years due to a successful marketing cam-
paign and favorable reviews on service-rating Web sites. Ever Clean owner Joanne Clark makes sales calls
herself and quotes on jobs based on length of gutter surface. Ever Clean hires college students to drive the
company vans to jobs and clean the gutters. A part-time bookkeeper takes care of billing customers and
other office tasks. Overhead is allocated based on direct labor-hours (DLH).
Joanne Clark estimates that her gutter cleaners will work a total of 1,000 jobs during the year. Each job
averages 600 feet of gutter surface and requires 12 direct labor-hours. Clark pays her gutter cleaners $15
per hour, inclusive of taxes and benefits. The following table presents the budgeted overhead costs for 2018:
Variable costs
$ 78,000
Supplies ($6.50 per DLH)
Fixed costs (to support capacity of 12,000 DLH)
25,000
Indirect labor
Depreciation
17,000
Other
24,000
Total budgeted costs
$144,000

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