Janice Huffman has decided to start Perez Cleaning, a residential housecleaning

Question

Janice Huffman has decided to start Perez 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 $65 per house cleaned and supplies are expected to cost $6 per house.

Required

Determine the total expected cost of equipment rental and the average expected cost of equipment rental per house cleaned, assuming that Perez Cleaning cleans 25, 35, or 45 houses during one month. Is the cost of equipment a fixed or a variable cost?

Determine the total expected cost of labor and the average expected cost of labor per house cleaned, assuming that Perez Cleaning cleans 25, 35, or 45 houses during one month. Is the cost of labor a fixed or a variable cost?

Determine the total expected cost of supplies and the average expected cost of supplies per house cleaned, assuming that Perez Cleaning cleans 25, 35, or 45 houses during one month. Is the cost of supplies a fixed or a variable cost?

Determine the total expected cost of cleaning houses, assuming that Perez Cleaning cleans 25, 35, or 45 houses during one month. Determine the average expected cost per house, assuming that Perez Cleaning cleans 25, 35, or 45 houses during one month.

Explanation / Answer

1)

The cost is fixed in nature as it remain same irrespective of number of house cleaned.

2)

The cost is variable in nature as it varies with number of house cleaned

3)

The cost is variable in nature as it varies with number of house cleaned

4)

25 35 45 Total expected cost 760 760 760 Average expected cost of equipment 760/25 =30.4 760/35= 21.71 760/45=16.89

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