Exercise 22-8 (Part Level Submission) (a) RENSING GROOMERS Flexible Budget Open

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Exercise 22-8 (Part Level Submission)

(a)

RENSING GROOMERS
Flexible Budget

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(c) & (d)

Exercise 22-8 (Part Level Submission)

Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following formulas:
Grooming supplies (variable) y = $0 + $5x Direct labor (variable) y = $0 + $13x Overhead (mixed) y = $9,900 + $2x
Milo, the owner, has determined that direct labor is the cost driver for all three categories of costs.

Explanation / Answer

A)

c)

d)Total variable cost per DLH = 5+13+2 = 20 DLH

Total cost = [20 *640] +9900

            = 12800+9900

            = 22700

Amount charged in total = 22700 [1+.40 ] = 31780

Number of Jobs = 640/1.3 = 492.30769

Charge per client = 31780 /492.30769

             = $ 64.55 per job

Activity Level 540 580 680 Variable cost Grooming supplies 2700    [540*5] 2900    [580*5] 3400 Direct Labor 7020    [540*13] 7540    [580*13] 8840 Overhead 1080    [540*2] 1160 1360 Total variable cost 10800 11600 13600 Fixed cost overhead 9900 9900 9900 Total cost 20700 21500 23500

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