Prepare an income statement in good form

Assignment Help Cost Accounting

Reference no: EM13901117

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:

Direct Materials	$ 27,000
Direct Labor	472,500
Variable Overhead	15,000
Fixed overhead	18,000

Next year, HHH expects to purchase $25,600 of direct materials. Projected beginningand ending inventories for direct materials are as follows:

	Direct Materials Inventory
Beginning	$4,000
Ending	2,600

There is no work-in-process inventory; in other words, a cleaning is started and completed on the same day.

Required:

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.

Reference no: EM13901117

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