Lance Peckam owns and operates three Confiable Muffler outlets in Tucson, Arizona. Confiable Muffler specializes in replacing mufflers—replacing them with mufflers that have a lifetime guarantee. Confiable is a franchise popular throughout the Southwest. In April, purchases of materials equaled $200,000, the beginning inventory of mate- rials was $26,300, and the ending inventory of materials was $14,250. Payments to direct labor during the month totaled $53,000. Overhead incurred was $120,000. The Tucson outlets also spent $15,000 on advertising during the month. A franchise fee of $3,000 per outlet is paid every month. Revenues for April were $500,000. lop25

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Required: 1. What was the cost of materials used for muffler-changing services during April? 2. What was the prime cost for April? 3. What was the conversion cost for April? 4. What was the total service cost for April? 5. Prepare an income statement for the month of April. 6. Confiable purchases all its mufflers from Remington Company, a manufacturer of mufflers. Discuss the differences between the products offered by Remington and Confiable.