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 ..... ?
Direct labor ........$472,500
Variable overhead ..... 15,000
Fixed overhead ..... 18,000
Next year, HHH expects to purchase $25,600 of direct materials. Projected beginning and ending inventories for direct materials are as follows:
Direct Materials Inventory
Beginning ...$4,000
Ending ..... 2,600
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.
2. How does this cost of services sold statement differ from the cost of goods sold statement for a manufacturing firm?