(L. OBJ. 1, 2, 3) Calculating income and cost per unit for a service company [15—20 min]...

(L. OBJ. 1, 2, 3) Calculating income and cost per unit for a service company [15—20 min]

The Tree Doctors provide tree-spraying services in the company’s home county. Ivan Peters, the owner, incurred the following operating costs for the month of January 2012:

The Tree Doctors earned 28,000 in revenues for the mouth of January by spraying trees totaling 35,000 feet in height.

Requirements

1. Prepare an income statement for the month of January. Compute the ratio of total operating expense to total revenue and operating income to total revenue.

2. Compute the unit operating cost of spraying one foot of tree height.

3. The manager of The Tree Doctors must keep unit operating cost below $.60 per foot in order to get his bonus. Did he meet the goal?

4. What kind of system could The Tree Doctors use to integrate all its data?