Question

Janice Huffman has decided to start Finch Cleaning, a residential housecleaning service company. She is able to rent cleaning equipment at a cost of $720 per month. Labor costs are expected to be $65 per house cleaned and supplies are expected to cost $10 per house.

Required

1. Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of equipment a fixed or a variable cost?

2. Determine the total expected cost of labor and the average expected cost of labor per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of labor a fixed or a variable cost?

3. Determine the total expected cost of supplies and the average expected cost of supplies per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of supplies a fixed or a variable cost?

4. Determine the total expected cost of cleaning houses, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month.

5. Determine the average expected cost per house, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month.

Complete this question by entering your answers in the tabs below.

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• Required E

Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of equipment a fixed or a variable cost? (Round "Average per unit" answers to 2 decimal places.)

	No. of Houses Cleaned 30 40 50 Total expected rental cost Average per unit rental cost The cost of equipment is a

Determine the total expected cost of labor and the average expected cost of labor per house cleaned, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. Is the cost of labor a fixed or a variable cost?

	No. of Houses Cleaned 30 40 50 Average per unit labor cost Total labor cost The cost of labor is a

	No. of Houses Cleaned 30 40 50 Average per unit supplies cost Total cost of supplies The cost of supplies is a

Determine the total expected cost of cleaning houses, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month.

	No. of Houses Cleaned 30 40 50 Total expected cost

Determine the average expected cost per house, assuming that Finch Cleaning cleans 30, 40, or 50 houses during one month. (Round your answers to 2 decimal places.)

	No. of Houses Cleaned 30 40 50 Average cost per unit

Answer 1

1.

No. of Houses Cleaned	30	40	50
Total expected rental cost	720	720	720
Average per unit rental cost	24	18	14.4
The cost of equipment is a Fixed Cost

The cost does not change with the change in level of output and is thus a fixed cost

2.

No. of Houses Cleaned	30	40	50
Average per unit labor cost	65	65	65
Total labor cost	1,950	2,600	3,250
The cost of labor is a Variable Cost

The labor cost changes with level of output and is thus a variable cost

3.

No. of Houses Cleaned	30	40	50
Average per unit supplies cost	10	10	10
Total cost of supplies	300	400	500
The cost of supplies is a Variable Cost

Changes with level of output

4.

No. of Houses Cleaned 30 40 50 Total expected cost 2,970 3,720 4,470

Total Expected Cost = Rental Cost + Labor Cost + Supplies Cost

No. of Houses Cleaned 30 40 50 Average Cost per Unit 99 93 89.4

Average Cost = Total Cost/Number of Units