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Question: Budgeting, service company. Ever Clean Company provides gutter cleaning services to residential clients. The company has enjoyed considerable growth in recent years due to a successful marketing campaign and favorable reviews on service-rating Web sites. Ever Clean owner Joanne Clark makes sales calls herself and quotes on jobs based on length of gutter surface. Ever Clean hires college students to drive the company vans to jobs and clean the gutters. A part-time bookkeeper takes care of billing customers and other office tasks. Overhead is allocated based on direct labor-hours (DLH). Joanne Clark estimates that her gutter cleaners will work a total of 1,000 jobs during the year. Each job averages 600 feet of gutter surface and requires 12 direct labor-hours. Clark pays her gutter cleaners $15 per hour, inclusive of taxes and benefits. The following table presents the budgeted overhead costs for 2018:

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1. Prepare a direct labor budget in both hours and dollars.

2. Calculate the budgeted overhead allocation rate based on the budgeted quantity of the cost drivers.

3. Calculate the budgeted total cost of all jobs for the year and the budgeted cost of an average 600-foot gutter-cleaning job.

4. Prepare a revenues budget for the year, assuming that Ever Clean charges customers $0.60 per square foot.

5. Calculate the budgeted operating income. 6. What actions can Clark take if sales should decline to 900 jobs annually?

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