Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN: 9781305970663
Author: Don R. Hansen, Maryanne M. Mowen
Publisher: Cengage Learning
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Textbook Question
Chapter 2, Problem 5CE
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:
Required:
- 1. Calculate the prime cost per cleaning.
- 2. Calculate the conversion cost per cleaning.
- 3. Calculate the total variable cost per cleaning.
- 4. Calculate the total service cost per cleaning.
- 5. What if rent on the office that Jean and Tom use to run HHH increased by $1,500? Explain the impact on the following:
- a. Prime cost per cleaning
- b. Conversion cost per cleaning
- c. Total variable cost per cleaning
- d. Total service cost per cleaning
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Janice Huffman has decided to start Rundle Cleaning, a residential housecleaning service company. She is able to rent cleaning
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Required
a. Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned,
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c. Determine the total expected cost of supplies and the average expected cost of supplies per house cleaned, assuming that Rundle
Cleaning cleans 20, 30, or 40 houses during one month. Is the cost of supplies a fixed or a variable cost?
d.…
Janice Huffman has decided to start Rundle Cleaning, a residential housecleaning service company. She is able to rent cleaning
equipment at a cost of $760 per month. Labor costs are expected to be $90 per house cleaned and supplies are expected to cost $6
per house.
Required
a. Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned,
assuming that Rundle Cleaning cleans 20, 30, or 40 houses during one month. Is the cost of equipment a fixed or a variable cost?
b. Determine the total expected cost of labor and the average expected cost of labor per house cleaned, assuming that Rundle
Cleaning cleans 20, 30, or 40 houses during one month. Is the cost of labor a fixed or a variable cost?
c. Determine the total expected cost of supplies and the average expected cost of supplies per house cleaned, assuming that Rundle
Cleaning cleans 20, 30, or 40 houses during one month. Is the cost of supplies a fixed or a variable cost?
d.…
Tim Urban, owner/manager of Urban's Motor Court in Key West, is considering outsourcing the daily room cleanup for his motel to Duffy's Maid Service. Tim rents an average of 50 rooms for each of 365 nights (365 × 50 equals the total rooms rented for the year). Tim's cost to clean a room is $12.50. The Duffy's Maid Service quote is $18.50 per room plus a fixed cost of $25,000 for sundry items such as uniforms with the motel's name.Tim's annual fixed cost for space, equipment, and supplies is $60,000.
Based on the given information related to costs for each of the options, the crossover point for Tim =_________ room nights (round your response to the nearest whole
number).
Chapter 2 Solutions
Cornerstones of Cost Management (Cornerstones Series)
Ch. 2 - What is an accounting information system?Ch. 2 - What is the difference between a financial...Ch. 2 - What are the objectives of a cost management...Ch. 2 - Define and explain the two major subsystems of the...Ch. 2 - What is a cost object? Give some examples.Ch. 2 - Prob. 6DQCh. 2 - What is a direct cost? An indirect cost?Ch. 2 - Prob. 8DQCh. 2 - What is allocation?Ch. 2 - Explain how driver tracing works.
Ch. 2 - What is a tangible product?Ch. 2 - Prob. 12DQCh. 2 - Give three examples of product cost definitions....Ch. 2 - Prob. 14DQCh. 2 - Prob. 15DQCh. 2 - Pietro Frozen Foods, Inc., produces frozen pizzas....Ch. 2 - For next year, Pietro predicts that 50,000 units...Ch. 2 - Pietro expects to produce 50,000 units and sell...Ch. 2 - Refer to Cornerstone Exercises 2.2 and 2.3. Next...Ch. 2 - Jean and Tom Perritz own and manage Happy Home...Ch. 2 - Jean and Tom Perritz own and manage Happy Home...Ch. 2 - Jean and Tom Perritz own and manage Happy Home...Ch. 2 - Jean and Tom Perritz own and manage Happy Home...Ch. 2 - Prob. 9ECh. 2 - The following items are associated with a cost...Ch. 2 - Nizam Company produces speaker cabinets. Recently,...Ch. 2 - Three possible product cost definitions were...Ch. 2 - Wyandotte Company provided the following...Ch. 2 - For each of the following independent situations,...Ch. 2 - LeMans Company produces specialty papers at its...Ch. 2 - Kildeer Company makes easels for artists. During...Ch. 2 - Anglin Company, a manufacturing firm, has supplied...Ch. 2 - Lakeesha Barnett owns and operates a package...Ch. 2 - Millennium Pharmaceuticals, Inc. (MPI), designs...Ch. 2 - Jazon Manufacturing produces two different models...Ch. 2 - Ellerson Company provided the following...Ch. 2 - Ellerson Company provided the following...Ch. 2 - Orinder Company provided the following information...Ch. 2 - Last year, Orsen Company produced 25,000 juicers...Ch. 2 - Last year, Orsen Company produced 25,000 juicers...Ch. 2 - The ability to assign a cost directly to a cost...Ch. 2 - Selected information concerning the operations of...Ch. 2 - Brody Company makes industrial cleaning solvents....Ch. 2 - Wright Plastic Products is a small company that...Ch. 2 - The following items are associated with a...Ch. 2 - The actions listed next are associated with either...Ch. 2 - Spencer Company produced 200,000 cases of sports...Ch. 2 - Prob. 33PCh. 2 - Mason, Durant, and Westbrook (MDW) is a tax...Ch. 2 - Orman Company produces neon-colored covers for...Ch. 2 - High drug costs are often in the news. Consumer...
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