Manzeck Company operates a snow-removal service. The company owns five trucks, each of which has a snow plow in the front to blow driveways and a snow thrower in the back to clear sidewalks. Because plowing snow is very tough on trucks, the company incurs significant maintenance costs. Truck depreciation and maintenance represents a significant portion of the company's overhead. The company removes snow at residential locations, in which case the drivers spend the bulk of their time walking behind the snow thrower machine to clear sidewalks. On commercial jobs, the drivers spend most of their time plowing. Manzeck allocates overhead based on labor hours. Total estimated overhead costs for the year are $46,400. Total estimated labor hours are 1.250 hours. The average residential property requires 0.5 hours of labor, while the average commercial property requires 2.5 hours of labor. The following additional information is available. Activity Cost Deals Estimated Estimated Use of Cost Drivers
Manzeck Company operates a snow-removal service. The company owns five trucks, each of which has a snow plow in the front to blow driveways and a snow thrower in the back to clear sidewalks. Because plowing snow is very tough on trucks, the company incurs significant maintenance costs. Truck depreciation and maintenance represents a significant portion of the company's overhead. The company removes snow at residential locations, in which case the drivers spend the bulk of their time walking behind the snow thrower machine to clear sidewalks. On commercial jobs, the drivers spend most of their time plowing. Manzeck allocates overhead based on labor hours. Total estimated overhead costs for the year are $46,400. Total estimated labor hours are 1.250 hours. The average residential property requires 0.5 hours of labor, while the average commercial property requires 2.5 hours of labor. The following additional information is available. Activity Cost Deals Estimated Estimated Use of Cost Drivers
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Manzeck Company operates a snow-removal service. The company owns five trucks, each of which has a snow plow in the front to
plow driveways and a snow thrower in the back to clear sidewalks. Because plowing snow is very tough on trucks, the company incurs
significant maintenance costs. Truck depreciation and maintenance represents a significant portion of the company's overhead. The
company removes snow at residential locations, in which case the drivers spend the bulk of their time walking behind the snow
thrower machine to clear sidewalks. On commercial jobs, the drivers spend most of their time plowing. Manzeck allocates overhead
based on labor hours. Total estimated overhead costs for the year are $46,400. Total estimated labor hours are 1,250 hours. The
average residential property requires 0.5 hours of labor, while the average commercial property requires 2.5 hours of labor. The
following additional information is available.
Activity
Cost Pools
Plowing
Snowthrowing
(a)
Cost Drivers
Square yards of surface plowed
Linear feet of sidewalk cleared
Predetermined overhead rate
Estimated
Overhead
$
$40,700
$5,700
Estimated Use
of
Determine the predetermined overhead rate under traditional costing. (Round answer to 2 decimal places, e.g. 12.25.)
Cost Drivers
per Activity
185,000
57,000
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