Jean and Tom Perritz own and manage Happy Home Helpers Inc. (HHH), a housecleaning service. Each cleaning (cleaning one house one time) takes a team of threehouse cleaners about 1.5 hours. On average, HHH completes about 15,000 cleaningsper year. The following total costs are associated with the total cleanings:
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Direct Materials
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$ 27,000
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Direct Labor
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472,500
|
|
Variable Overhead
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15,000
|
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Fixed overhead
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18,000
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Required:
1. Calculate the prime cost per cleaning.
2. Calculate the conversion cost per cleaning.
3. Calculate the total variable cost per cleaning.
4. Calculate the total service cost per cleaning.
5. What if rent on the office that Jean and Tom use to run HHH increased by $1,500?Explain the impact on the following:
a. Prime cost per cleaning
b. Conversion cost per cleaning
c. Total variable cost per cleaning
d. Total service cost per cleaning