19th Edition

ISBN: 9781947172609

Author: OpenStax

Publisher: OpenStax College

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Textbook Question

Chapter 10, Problem 15PB

Dr. Detail is a mobile car wash. The price for a standard wash is $35 and takes half an hour. Each worker is paid $20/hr, uses $5 of materials and $0.50 per mile to use their own vehicle to travel from job to job.

The average job is 5 miles.

Ernest Kuhn’s son got sick in the car, and Ernest Kuhn has asked Dr. Detail to detail his car instead of doing a simple wash and vacuum.

A. Determine the differential income if $100 was charged to detail the car. Each car detail will take 2 hours. The materials used by the worker is three times that of a standard car wash.

B. If the price is raised to $150, what is the differential income change?

C. Keeping the price at $150, if the worker rate per hour would increase to $20/hr how would the differential income change? Prepare an Excel spreadsheet.

D. What other issues would you need to consider?

Expert Solution & Answer

Chapter 10 Solutions

Principles of Accounting Volume 2

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