Problem 10-36 Variance Calculation; Analysis; Service Business (LO 10-1, 10-3) Harrison Wolfe operates a residential landscaping business in an affluent suburb of Atlanta. In an effort to provide quality service, he has concentrated solely on the design and installation of upscale landscaping plans (e.g., trees, shrubs, fountains, and lighting). With his clients continually requesting additional services, Wolfe recently expanded into lawn maintenance, including fertilization. The following data relate to his first year's experience with 55 fertilization clients. Each client required nine applications throughout the year and was billed $40.00 per application Two applications involved Type I fertilizer, which contains a special ingredient for weed control. The remaining seven applications involved Type Il fertilizer. Wolfe purchased 6,800 pounds of Type I fertilizer at $0.55 per pound and 11,800 pounds of Type I fertilizer at $0.45 per pound. Actual usage amounted to 5,550 pounds of Type l and 8,700 pounds of Type ll A new, part-time employee was hired to spread the r. Wolfe had to pay premium wages of $13.30 per hour because of a very tight labor market; the employee logged a total of 201 hours at client residences. Based on previous knowledge of the operation, articles in trade journals, and conversations with other landscapers, Wolfe established the following standards: Typical hourly wage rate of landscape personnel: $9.70 Labor time per application: 40 minutes Fertilizer purchase price per pound: Type I, $0.68; Type l1, $0.46 Fertilizer usage: 58 pounds per application Unfortunately, Wolfe's new lawn fertilization service did not go as smoothly as planned, with customer complaints being much higher than expected. Required: 3-Compute the actual cost of the client applications. (Note: Exclude any fertilizer in a.inventory, as remaining fertilizer can be used next year.) (Round your answer to 2 decimal place.) Actual cost 3- Calculate the profit or loss of Wolfe's new lawn fertilization service. (Round your b. answer to 2 decimal place.) 4.On the basis of the variances that you computed in parts (1) and (2) was the new service a success from an overall cost-control perspective? (Round your answer to 2 decimal place.) Total Variance 5. Should the fertilizer service be continued next year? Yes, continue service with no changes Yes, continue service but consider some changes No