Power Brite Painting Company specializes in refurbishing exterior painted surfac

Question

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:

Required:

1.  Classify the costs as variable, fixed, or mixed.

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.

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.
$

Skilled labor Unskilled labor Chlorine Paint primer Paint Depreciation, paint-spraying equipment Lease payments on vans Rent on storage building Utilities Skilled labor $20 per hour Unskilled labor $8 per hour Gallons of chlorine used 3,768 gallons at $5.50 per gallon Paint primer 7,536 gallons at $15.50 per gallon Paint 6,280 gallons at $16 per gallon Depreciation of paint-spraying equipment $600 per month depreciation Lease of two vans $800 per month total Rent on storage building $450 per month Month Number of Jobs January 42 February 37 March 44 April 49 May 54 June 62 July 71 August 73 September 63 October 48 November 45 December 40 Totals 628 Cost Hours Worked S 3,950 840 3,550 740 4,090 880 4,410 980 4,720 1,080 5,240 1,240 5,820 1,420 5,890 1,460 5,370 1,260 4,340 960 4,210 900 3,830 800 $55,420 12,560

Explanation / Answer

1. Costs classified.

Variable costs: Skilled labor Unskilled labor Chlorine Paint primer Paint

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Fixed costs: Depreciation, paint-spraying equipment Lease payments on vans Rent on storage building

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Mixed costs: Utilitie

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