Cost of Services Sold Jean and Tom Perritz own and manage Happy Home Helpers, In
ID: 2530142 • Letter: C
Question
Cost of Services Sold
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:
Next year, HHH expects to purchase $25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows:
There is no work-in-process inventory and no finished goods inventory; in other words, a cleaning is started and completed on the same day.
Required:
1. Prepare a statement of cost of services sold in good form. If an amount is zero, enter "0".
2. How does this cost of services sold statement differ from the cost of goods sold statement for a manufacturing firm?
Direct materials ? Direct labor $472,500 Variable overhead 15,000 Fixed overhead 18,000Explanation / Answer
Statement of cost of services sold:
Direct Material Beginning 4000
Add: Purchases 25600
Less: Closing Inventory 2600
Direct Material Used 27000
Direct Labour 472500
Variable overhead 15000
Fixed overhead 18000
Cost of Services Sold $532500