Cost of Services Produced

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 0.9 hours. On average, HHH completes about 9,000 cleanings per year. The following total costs are associated with the total cleanings:

Direct materials ? Direct labor $270,900 Variable overhead 12,600 Fixed overhead 14,400

Next year, HHH expects to purchase $29,000 of direct materials. Projected beginning and ending inventories for direct materials are as follows:

Direct materials Inventory Beginning $4,400 Ending 3,000

There is no work-in-process inventory; in other words, a cleaning is started and completed on the same day.

Required:

1. Prepare a statement of services produced in good form. If an amount is zero, enter "0".

Happy Home Helpers, Inc. Statement of Cost of Services Produced For the Coming Year Direct materials Beginning inventory $ Add: Purchases Materials available $ Less: Cleaning overhead Direct materials used in production $ Direct labor Cleaning overhead Total services production costs added $ Add: Beginning work in process Less: Ending inventory Cost of services produced $

2. What if HHH planned to purchase $33,800 of direct materials? Assume there would be no change in beginning and ending inventories of materials. What effect would this have on cost of services produced?

Cost of services produced would increase by $