Bill Johnson owns and operates three Frazer Speedo outlets in Wichita, Kansas. Frazer Speedo is an oil and lubrication service outlet—one of many franchise outlets popular throughout the Midwest. The Frazer Speedo outlets also change transmission and power steering fluids. In May, purchases of materials equaled $80,000, the beginning inventory of material was $47,300, and the ending inventory of material was $15,250. Payments to direct labor during the month totaled $63,000. Overhead incurred was $110,000. The Wichita out¬

lets also spent $5,000 on advertising during the inonth\A franchise fee of $2,000 per outlet is paid every month. Revenues for May were $400,000.

Required:

1. What was the cost of materials used for oil and lubrication services during May?

2. What was the prime cost for May?

3. What was the conversion cost for May?

4. What was the total service cost for May?

5. Prepare an income statement for May.