Freely Service Provides Residential and Commercial Monthly Swimming Pool Cleaning

Multiple Choice

Freely Service provides residential and commercial monthly swimming pool cleaning services.Information on this service is as follows:
Service revenue $140,000
Direct materials 18,000
Direct labor 44,000
Estimated travel costs for the month total $2,340 and are allocated to each client based on miles driven to each pool cleaning.The company estimates it will clean 50 residential pools and 80 commercial pools per month with 1,200 total miles used for commercial pools and 2,400 total miles used for residential pools.Because commercial pools are much larger, they take 3 hours to clean, while residential pools take a half hour each.During the month, the actual mileage totaled 2,600 miles.How much is the rate at which travel costs will be allocated to residential pools?

A) $0.65
B) $0.975
C) $18.00
D) $8.83