The Everest Company provides landscaping services to corporations and businesses. All its landscaping work requires Everest to use landscaping equipment. Its landscaping equipment has the capacity to do 12,500 hours of landscaping work. It currently anticipates getting orders that would utilize 11,100 hours of equipment time. Everest charges $110 per hour for landscaping work. Cost information for the current expected activity level is as follows: A (Click the icon to view the cost information.) Required Begin by completing an analysis, and start by showing the computation of the company's contribution margin without the landscaping work from Tilman. Next calculate the contribution margin of the special order.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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The Everest Company provides landscaping services to corporations and businesses. All its landscaping work requires Everest to use landscaping equipment. Its landscaping equipment has the capacity to do 12,500 hours of
landscaping work. It currently anticipates getting orders that would utilize 11,100 hours of equipment time. Everest charges $110 per hour for landscaping work. Cost information for the current expected activity level is as follows:
E (Click the icon to view the cost information.)
Required
Begin by completing an analysis, and start by showing the computation of the company's contribution margin without the landscaping work from Tilman. Next calculate the contribution margin of the special order.
Contribution Margin for
Contribution Margin for
Cost information
Existing Landscape
Tilman Corporation
Customers
Landscaping Work
Revenues
Revenues ($110 x 11,100 hours)
1,221,000
Variable costs:
Variable landscaping costs (including materials and labour), which vary
754,800
Landscaping costs
with the number of hours worked ($68 per hour x 11,100 hours)
92,000
Marketing costs
Fixed landscaping costs
73,260
Total variable costs
Variable marketing costs (6% of revenues)
75,000
Contribution margin
Fixed marketing costs
995,060
Total costs
Determine the contribution margin per hour for existing customers. (Enter amounts to the nearest cent.)
225,940
= Contribution margin per hour for existing custor
Operating income
Choose from any list or enter any number in the input fields and then continue to the next question.
Print
Done
hp
Transcribed Image Text:The Everest Company provides landscaping services to corporations and businesses. All its landscaping work requires Everest to use landscaping equipment. Its landscaping equipment has the capacity to do 12,500 hours of landscaping work. It currently anticipates getting orders that would utilize 11,100 hours of equipment time. Everest charges $110 per hour for landscaping work. Cost information for the current expected activity level is as follows: E (Click the icon to view the cost information.) Required Begin by completing an analysis, and start by showing the computation of the company's contribution margin without the landscaping work from Tilman. Next calculate the contribution margin of the special order. Contribution Margin for Contribution Margin for Cost information Existing Landscape Tilman Corporation Customers Landscaping Work Revenues Revenues ($110 x 11,100 hours) 1,221,000 Variable costs: Variable landscaping costs (including materials and labour), which vary 754,800 Landscaping costs with the number of hours worked ($68 per hour x 11,100 hours) 92,000 Marketing costs Fixed landscaping costs 73,260 Total variable costs Variable marketing costs (6% of revenues) 75,000 Contribution margin Fixed marketing costs 995,060 Total costs Determine the contribution margin per hour for existing customers. (Enter amounts to the nearest cent.) 225,940 = Contribution margin per hour for existing custor Operating income Choose from any list or enter any number in the input fields and then continue to the next question. Print Done hp
Required
The Everest Company provides landscaping services to corporations and businesses. All its landscaping work requires Everest t
landscaping work. It currently anticipates getting orders that would utilize 11,100 hours of equipment time. Everest charges $110
E (Click the icon to view the cost information.)
of
lows:
In order to fill it available capacity, Everest's salespersons are trying to find new
business. Tilman Corporation wants Everest to do 3,500 hours of landscaping work
for $74 per hour. Variable servicing costs for the Tilman Corporation order are $54
per hour and variable marketing costs are 6% of revenues. Everest can accept as
much or as little of the 3,500 hours of Tilman's landscaping work, What should
Everest Corporation do?
Required
ConubauoT margim
Determine the contribution margin per hour for existing customers. (Enter amounts to the nearest cent.)
Contribution margin per hour for existing customers
per hour
Print
Done
Determine the contribution margin per hour for Tilman's order and then determine whether Everest should do any landscaping
Contribution margin per hour for Tilman's order
per hour
To maximize operating income, Everest should allocate as much of its capacity to customers who generate the
and only
contribution margin per unit. That is, Everest should first allocate equipment capacity to
the balance to
hours of equipment capacity to existing customers and
Everest maximizes total contribution margin by allocating
to Tilman Corporation, for a total contribution margin of S
Choose from any list or enter any number in the input fields and then continue to the next question.
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Transcribed Image Text:Required The Everest Company provides landscaping services to corporations and businesses. All its landscaping work requires Everest t landscaping work. It currently anticipates getting orders that would utilize 11,100 hours of equipment time. Everest charges $110 E (Click the icon to view the cost information.) of lows: In order to fill it available capacity, Everest's salespersons are trying to find new business. Tilman Corporation wants Everest to do 3,500 hours of landscaping work for $74 per hour. Variable servicing costs for the Tilman Corporation order are $54 per hour and variable marketing costs are 6% of revenues. Everest can accept as much or as little of the 3,500 hours of Tilman's landscaping work, What should Everest Corporation do? Required ConubauoT margim Determine the contribution margin per hour for existing customers. (Enter amounts to the nearest cent.) Contribution margin per hour for existing customers per hour Print Done Determine the contribution margin per hour for Tilman's order and then determine whether Everest should do any landscaping Contribution margin per hour for Tilman's order per hour To maximize operating income, Everest should allocate as much of its capacity to customers who generate the and only contribution margin per unit. That is, Everest should first allocate equipment capacity to the balance to hours of equipment capacity to existing customers and Everest maximizes total contribution margin by allocating to Tilman Corporation, for a total contribution margin of S Choose from any list or enter any number in the input fields and then continue to the next question. insert pause oreak scroll f11 12 f6 OD f7 0 f8 E f9 f1o f3 f4 f5 SC backspace 8 7 & 23 $ 8. 3 4. 4 Y しの
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