Rensing Groomers is in the dog-grooming business. Its operating costs are descri
ID: 2477088 • Letter: R
Question
Rensing Groomers is in the dog-grooming business. Its operating costs are described by the following formulas: Grooming supplies (variable) y = $0 + $4x Direct labor (variable) y = $0 + $13x Overhead (mixed) y = $9,890 + $1x Milo, the owner, has determined that direct labor is the cost driver for all three categories of costs. Prepare a flexible budget for activity levels of 539, 579, and 686 direct labor hours. (List variable costs before fixed costs.) Calculate the total cost per direct labor hour at each of the activity levels specified in part (a). (Round answers to 2 decimal places, e.g. 10.25.) The groomers at Rensing normally work a total of 628 direct labor hours during each month. Each grooming job normally takes a groomer 1.30 hours. Milo wants to earn a profit equal to 35% of the costs incurred. Determine what he should charge each pet owner for grooming. (Round answer to 2 decimal places, e.g. 10.25.)Explanation / Answer
1 and 2.
3.
He should charge $59.23 per pet ownwer for grooming.
RENSING GROOMERS FLEXIBLE BUDGET DIRECT LABOUR HOURS 539 579 686 $ $ $ Grooming Supplies (Variable $4 per direct lh)) 2,156 2,316 2,744 Direct Labour(variable $13 per direct lh) 7,007 7,527 8,918 Varible Overhead(variable $1 per lh) 539 579 686 Fixed Overhead 9,890 9,890 9,890 Total cost 19,592 20,312 22,238 Total cost per direct labour hour(Total cost/ direct lh) 36.35 35.08 32.42