Question
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
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 $39,000
Direct labor 492,000
Variable overhead 15,000
Fixed overhead 18,000
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 $1,500? Which of the following statements best describes the effect of this on HHH's costs?
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