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 1.5 hours. On average, HHH completes about 15,000 cleanings per year. The following total costs are associated with the total cleanings:

Direct materials	?
Direct labor	$472,500
Variable overhead	15,000
Fixed overhead	18,000

Next year, HHH expects to purchase $25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows:

	Direct Materials Inventory
Beginning	$4,000
Ending	2,600

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
Direct labor	$
Materials available	$
Direct materials used in production		$
Total services production costs added		$
Cost of services produced		$

2. What if HHH planned to purchase $30,000 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 by $