Problem 8-22

Requirement 1

Cleaning Travel to Job Others

Carpets Jobs Support
Wages $140,000 105000 21000 - 14000
Cleaning 25,000 25000 - - -
supplies
Cleaning 10,000 7000 - - 3000
equipment
depreciation
Vehicle 30,000 - 24,000 - 6000
expenses.
Office 60,000 - - 36000 24000
expenses
President’s 75,000 22500 52500
compensation
Total $340,000 $137000 $45,000 $58,500 $ 99,500

Requirement 2

Activity Cost Total Activity for Activity Rate (a) /(b)

Pools Overhead (a) the Year(b)
Cleaning $137000 10,000 $13.7 per hundred(’00) sq. feet
Carpets hundred
square feet
Travel to $45,000 50,000 miles $0.90 per mile
Jobs
Job Support $58,500 1,800 jobs $32.5 per job
Requirement 3

Activity Activity Rate Total Activity Overhead Total

Cost Pools Measures
Cleaning $13.7 per hundred(’00) 6 hundred sq. feet $82.2
Carpets sq. feet
Travel to $0.90 per mile 52 miles $46.8
Jobs
Job $32.5 per job 1 job $32.5
Support
$161.5

Requirement 4

Particulars Total
Revenue $137.70
Less. Total Costs :
Cleaning Carpets $82.2
Travel to Jobs $46.8
Job Support $32.5
Total Costs $161.5
Profit Margin (23.8)

Requirement 5

Requirement 6
EXERCISE 8-7

Particulars Delux Standard

DM $60.00 $45.00
DL $9.60 $7.20
MOH $4.64 $3.48
Total Product Costs

MOH Per DLHs = $290,000/ 50,000 DLHS

= $5.8 per DLHs

Per Unit Delux require 0.8 DLHs

Per Unit Standard require 0.6 LHs