Wabash 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 500 jobs:

Data on utilities for the year follow:

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.
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. (Round to two decimal places.)
5. Why actual utilities costs vary from the amount can computed using the utilities costformula?

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Skilled labor Unskilled labor Gallons of chlorine used Paint primer Paint Depreciation of paint-spraying equipment Lease of two vans Rent on storage building $20 per hour $8 per hour 3,000 gallons at $5.50 per gallon 7,536 gallons at $15.50 per gallon 6,280 gallons at $16.00 per gallon $600 $800 per month total $421 permonth per month depreciation Month January February March Apri May June July August September October November December Totals Number of Jobs 42 37 Hours Worked Cost 3,950 3,550 4,090 4410 4,720 5,240 5,820 5,890 5,370 4,340 4,210 3,830 840 740 880 980 1,080 1,240 1420 1460 1,260 960 900 800 12,560 49 62 71 73 63 48 45 40 628 $55,420