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We-Clean, Inc., is a home-cleaning service. It originally specialized in serving small residential clients but recently started contracting for work in large apartment and office buildings. Julie Lodge, the owner, believes that the commercial sector has more growth opportunities and is considering dropping the residential service. Twenty cleaning employees worked a total of 41,000 hours last year, 29,000 on residential jobs and 12,000 on commercial jobs. Wages were $14 per hour for all work done. Any materials used are included in overhead as supplies. All overhead is allocated on the basis of labor-hours worked, which is also the basis for customer charges. Because of increased competition for commercial accounts, Julie can charge $32 per hour for residential work, but only $28 per hour for commercial work. Required: (a) If overhead for the year was $125,914, what were the profits of the commercial and the residential services using labor-hours as the allocation base? (Do not round intermediate calculations. Round "Profit" to the nearest whole dollar.) (b) Overhead consists of costs of traveling, using equipment, and using supplies, which can be traced as follows: Cost Driver Volume Activity Cost Driver Cost Commercial Residential Traveling Number of clients served $ 16,714 15 46 Using equipment Equipment hours 37,200 3,800 2,200 Using supplies Area serviced in square yards 72,000 160,000 80,000 Total overhead $ 125,914 Recalculate profits for commercial and residential services based on these activity bases. (Do not round intermediate calculations. Round "Profit" to the nearest whole dollar.)

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