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Power Brite Painting Company specializes in refurbishing exterior painted surfaces that have been hard hit by humidity and insect debris. It uses a special technique, called pressure cleaning, before priming and painting the surface. The refurbishing process involves the following steps:

  1. Unskilled laborers trim all trees and bushes within two feet of the structure.
  2. Skilled laborers clean the building with a high-pressure cleaning machine, using about 6 gallons of chlorine per job.
  3. Unskilled laborers apply a coat of primer.
  4. Skilled laborers apply oil-based exterior paint to the entire surface.

On average, skilled laborers work 12 hours per job, and unskilled laborers work 8 hours. The refurbishing process generated the following operating results during the year on 628 jobs:

Data on utilities for the year are as follows:

Required:

1. Classify the costs as variable, fixed, or mixed.
Skilled labor
Unskilled labor
Chlorine
Paint primer
Paint
Depreciation, paint-spraying equipment
Lease payments on vans
Rent on storage building
Utilities

2. Using the high-low method, separate mixed costs into their variable and fixed components. Use total hours worked as the basis. Round your answers to two decimal places.

Variable rate $ per hour worked
Monthly Fixed Cost $

3. Compute the average cost per job for the year. Round your answer to two decimal places. (Hint: Divide the total of all costs for the year by the number of jobs completed.)
$ per job

4. Project the average cost per job for next year if variable costs per job increase 20 percent. Round your answer to two decimal places.
$

Accounting Basics, Accounting

  • Category:- Accounting Basics
  • Reference No.:- M9796749

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