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Exercise 9-45 (Algo) Activity-Based Costing in a Service Environment (LO 9-3,4,5) Elite Lawn & Plowing (ESP) is slown and show plowing service with both residential and commercial clients. The owner believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty employees worked a total of 43,000 hours last yesr, 27,000 on residential jobs and 15.000 on commercialjobs. Weges were $15 per hour for all work done. Any materials used are included in overhead as supplies. All overheads allocated on the basis of labor-hours worked, which is also the basis for customer charges. Because of increased competition for commercial sccounts. EL&P can charge $35 per hour for residential work, but only $25 per hour for commercial work. Required: a. If overhes for the year was $129,340, what were the profits of the residential and commercial services using labor-hours as the allocation base? (Do not round Intermediate calculations. Round final answers to the nearest whole dollar.) b. Overhead consists of costs of traveling to the site, using equipment Including vehicle rental), and using supplies, which can be traced as follows Cost Driver volume Activity Cost Driver Cost Commercial Traveling Nauber of clients served $ 14,30 15 using equipment Equipment hours 42. using supplies Area serviced in square yards 72,200 110,00 80,220 Total overhead 4a Recalculste profits for commercial and residential services based on these activity bases. Do not round Intermediate calculations. Round final answers to the nearest whole dollar.) Commercial Residential a Revenue Direct Labor Overhead Pront Total Overhead Proht b

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