Question

ChimneySweep provides cleaning services for residential chimneys and fireplaces. The cleaning service requires $20 in variable costs for cleaning materials. The fixed costs of labor, the company’s truck, and administrative support are $459,600 per year. ChimneySweep averages 80 service calls per month.Required: What is the average cost per cleaning service call?

Answer 1

Answer:

$498.75

Explanation:

The computation of the average cost per cleaning service call is given below:

= (Fixed costs of labor, the company’s truck, and administrative support + number of service calls per months × total number of months in a year × variable cost per cleaning material) ÷ (number of service calls per months × total number of months in a year)

= ($459,600 + 80 × 12 × $20) ÷ (80 × 12)

= ($459,600 + $19,200) ÷ ($960)

= $498.75