P1 PROBLEMS Cost Behavior and Projection for a Service Business P1. Wabash Compa
ID: 2549088 • Letter: P
Question
P1
PROBLEMS Cost Behavior and Projection for a Service Business P1. Wabash Company specializes in refurbishing exterior pain cengagebrain.com to access Exercise Set R LO 1, 2, 5 st comp ,.145 been hard hit by humidity and insect debris. It uses a spee ed tob: $907.76 cleaning, before priming and painting the surface. The cost: $ er painted surfaces that have insect debris. It uses a special technique, called pressure following steps refurbishing process involves the 2. Skilled laborers clean the building trim all trees and bushes within two feet of the structure. about 6 gallons of chlorine per job. 3. Unskilled laborers apply a coat of primer 4. Skilied laborers apply ling with a high-pressure cleaning machine, using a oil-based exterior paint to the cntire surface. On average, skilled laborers work 12 hours per job, and unskilled laborers wo The refurbishing process gencrated the following operating resu 500 jobs: rk 8 hours during the year on $20 per hour $8 per hour Skilled labor Unskilled labor Gallons of chlorine used Paint primer Paint Depreciation of paint-spraying equipment Lease of two vans Rent on storage building 3,000 gallons at $5.50 per gallon 7,536 gallons at $15.50 per gallon 6,280 gallons at $16.00 per gallon $600 per month depreciation $800 per month total $421 per month ContinueExplanation / Answer
1. Cost Classification
2. High - Cost Method
Veriable cost per unit formula = (y2 y1) / (x2 x1)
Veriable cost per unit formula = (y2 y1) / (x2 x1)
(5890 - 3830) / (1460 - 800) = 2060 / 660 = 3.1212
Veriable Cost for August = 1460 hrs * 3.1212 = 4,557
Fixed Cost for August = 5890 - 4557 = 1333
3. Avarage Cost per year
No. of Jobs Completed = 628
4. Average Cost Per Job for next year
Cost Details Nature of Cost Skilled Labour Variable Unskilled Labour Variable Gallon of chlorine Used Variable Paint Primer Variable Paint Variable Depreciation Fixed Lease of two van Fixed Rant on storage building Fixed Utilities Cost MixedRelated Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.