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:
- Unskilled laborers trim all trees and bushes within two feet of the structure.
- Skilled laborers clean the building with a high pressure cleaning machine, using about 6 gallons of chlorine per job.
- Unskilled laborers apply a coat of primer.
- 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:
Data on utilities for the year are as follows:
Required:
1. Classify the costs as variable, fixed, or mixed.
| Skilled labor | |
| Unskilled labor | |
| Chlorine | |
| Paint primer | |
| Paint | |
| Depreciation, paint spraying equipment | |
| Lease payments on vans | |
| Rent on storage building | |
| Utilities |
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.
| Variable rate | $per hour worked |
| Monthly Fixed Cost | $ |
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.
$
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