Jean and Tom Perritz own and manage Happy Home Helpers, Inc. (HHH), a house-clea

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 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 $27,000

Direct Labor 472,500

Variable overhead 15,000

Fixed Overhead 18,000

If required, round your answer to the neareast cent.

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.

Note: Please show ALL work and how you calculated answers.

Explanation / Answer

a) Prime cost per cleaning = (27000+472500)/15000 = 33.30 per cleaning

b) Conversion cost per cleaning = (472500+15000)/15000 = 32.50 per cleaning

c) Variable cost per cleaning = (27000+472500+15000)/15000 = 34.30 per cleaning

d) Total service cost per cleaning = (27000+472500+15000+18000)/15000 = 35.50 per cleaning

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