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 house cleaaners 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 Labour $472,500

Vaiable 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

Begginning $4,000

Ending $2,600

1. Prepare an income statement in good form

2. What if Jean and Tom increased the price to $50 per cleaning and no other information was affected. Explain which line items in the income statement would be affected and how.