Dorothy Gotay owns and operates three Compufix shops in the Boston area. Compufix repairs and upgrades computers on site. In August, purchases of materials equaled $9,750, the beginning inventory of materials was $850, and the ending inventory of materials was $950. Payments for direct labor during the month totaled $18,570. Overhead incurred was $15,000. The Boston shops also spent $5,000 on advertising during the month. Administrative costs (primarily accounting and legal services) amounted to $3,000 for the month. Revenues for August were $60,400.

Required:

1. What was the cost of materials used for repair and upgrade services during August?

2. What was the prime cost for August?

3. What was the conversion cost for August?

4. What was the total cost of services for August?

5. Prepare an income statement for August.