Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its. 1 answer below »

 
   

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Calvert Associates prepares architectural drawings to conform to local structural-safety codes. Its income statement for 2017 is as follows: Revenues……………………………………………………………$701,250 Salaries of professional staff (7,500 hours * $52 per hour)………….390,000 Travel………………………………………………………………….15,000 Administrative and support costs……………………………………171,600 Total costs……………………………………………………………576,600 Operating income……………………………………………………$124,650 The percentage of time spent by professional staff on various activities follows: Making calculations and preparing drawings for clients…………………77% Checking calculations and drawings…………………………………………3 Correcting errors found in drawings (not billed to clients) …………………8 Making changes in response to client requests (billed to clients) …………..5 Correcting own errors regarding building codes (not billed to clients) ……..7 Total……………………………………………………………………..100% Assume administrative and support costs vary with professional-labor costs. Consider each requirement independently. Required: 1. How much of the total costs in 2017 are value-added, non-value-added, or in the gray area between? Explain