Question: Power Brite Painting Company specializes in refurbishing exterio

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:
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 ...$600 per month depreciation
Equipment
Lease of two vans........$800 per month total
Rent on storage building......$450 per month
Data on untilities for the year are as follows:



Required
1. Classify the costs as variable, fixed, or missed.
2. Using the high-low method, separate mixed costs into their variable and fixed components. Use total hours worked as the basis.
3. Compute the average cost per job for the year.
4. Project the average cost per job for next year if variable costs per job increase 20 percent.
5. Why can actual utilities costs vary from the amount computed using the utilities costformula?
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  • CreatedFebruary 23, 2012
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