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	$44,100
Direct labor	701,400
Variable overhead	23,100
Fixed overhead	27,300

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?

• Prime costs would increase
• Conversion costs per cleaning would increase
• Total service costs per cleaning would decrease
• Total variable costs would decrease