Cost of Services Produced Jean and Tom Perritz own and manage Happy Home Helpers

Question

Cost of Services Produced 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 1.2 hours. On average, HHH completes about 12,000 cleanings per year. The following total costs are associated with the total cleanings: Direct materials Direct labor Variable overhead Fixed overhead Next year, HHH expects to purchase $34,400 of direct materials. Projected beginning and ending inventories for direct materials are as follows: $372,000 13,200 15,600 Direct materials Inventory Beginning Ending There is no work-in-process inventory; in other words, a cleaning is started and completed on the same day. Required: 1. Prepare a statement of services produced in good form. If an amount is zero, enter "O". $2,900 1,500 Happy Home Helpers, Inc. Statement of Cost of Services Produced For the Coming Year

Explanation / Answer

1)

2)Direct material used in production = 2900+38800-1500=40200

The raw material used will increase from 35800 to 40200   (by 4400) .therefore cost of services produced would increase by 4400

Direct material Beginning raw material 2900 Raw material purchase 34400 material available 37300 less:ending raw material (1500) Raw material used in production 35800 Direct labor 372000 factory overhead [13200+15600] 28800 Total services production cost added 436600 Beginning work in process 0 ending work in process (0) cost of services provided 436600

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