Piatinum Web Services designs and maintains websites for small business entrepreneurs. Competition has been intensifying in recentyears and the company has been losing business to larger web design firms. Summary data concerning the last two years ofoperations follow:Estimated hours of service denandedEstimated overhead costActual hours of service providedActual overhead cost incurredHours of service available at capacityLast Year This Year1,800$ 117,000 $ 117,0001,700$ 117,000 $ 117,0002,6001,5501,4502,600The company applies its overhead costs to jobs using the hours of service provided as the allocation base. For example, this year andlast year, 35 service-hours were required to maintain the website for a small company called Verde Consulting. All of Platinum'soverhead costs are fixed, and the actual overhead cost incurred was exactly as estimated at the beginning of the year in last year andthis year.Required:1. Platinum Web Services computes its predetermined overhead rate at the beginning of each year based on the estimated overheadcost and the estimated hours of service demanded for the year. Using this approach, how much overhead would have been applied tothe Verde Consulting job last year? How about this year?2. The president of Platinum Web Services has heard that some companies in the industry have changed to a system of computing thepredetermined overhead rate based on the hours of service available at capacity. He would like to know what effect this methodwould have on job costs. How much overhead cost would have been applied to the Verde Consulting job last year using this method?How much would have been applied this year?3. If Platinum computes its predetermined overhead rate based on the hours of service available at capacity as in (2) above, how muchunused capacity cost would the company have incurred last year? This year?

Note: The answers and calculations have been rounded as per the given instructions in the question.…

Answered: Required: 1. Platinum Web Services…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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