Cornerstone Exercise 2.5 (Algorithmic) Costs of Services

Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-cleaning service. Each cleaning (cleaning one house one time) takes a team of three house cleaners about 2.1 hours. On average, HHH completes about 21,000 cleanings per year. The following total costs are associated with the total cleanings:

Direct materials	$48,300
Direct labor	554,400
Variable overhead	25,200
Fixed overhead	29,400

Required:

If required, round your answers to the nearest cent.

1. Calculate the prime cost per cleaning. $ per cleaning

2. Calculate the conversion cost per cleaning. $ per cleaning

3. Calculate the total variable cost per cleaning. $ per cleaning

4. Calculate the total service cost per cleaning. $ per cleaning

5. What if rent on the office that Jean and Tom use to run HHH increased by $2,100? Which of the following statements best describes the effect of this on HHH's costs?

- Select your answer

a.Prime costs would increase

b.Conversion costs per cleaning would increase

c.Total service costs per cleaning would decrease

d.Total variable costs would decrease