Grooming supplies (variable) Direct labor (variable) Overhead (mixed) y$0+$4x y$

Question

Grooming supplies (variable) Direct labor (variable) Overhead (mixed) y$0+$4x y$0+$13x y$10,800 $1x Milo, the owner, has determined that direct labor is the cost driver for all three categories of costs ?(a) Your answer is correct. Prepare a flexible budget for activity levels of 510, 600, and 680 direct labor hours. (List variable costs before fixed costs.) RENSING GROOMERS Flexible Budget Activity Level Direct Labor Hours 510 600 680 Variable Costs Grooming Supplies 2040 2400 2720 Direct Labor 6630 7800 8840 Overhead 510 600 680 Total Variable Costs 9180 10800 12240 Fixed Costs Overhead 10800 10800 10800

Explanation / Answer

c) Calculate total cost per direct labour hour :

Activity level 1 = 19980/510 = 39.18 per labour hour

Activity level 2 = 21600/600 = 36.00 per labour hour

Activity level 3 = 23040/680 = 33.88 per labour hour

d) Job = 625/1.3 = 481 Job

Total cost = (18*625)+10800 = 22050

Amount = 22050*1.35 = 29767.50

Charge per client = 29767.50/481 = $61.89

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