The Beauty Beyond Words Salon uses an activity-based costing system in its beaut
ID: 2541901 • Letter: T
Question
The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows:
Activity
Activity Rate
Hair washing
$4.00
Conditioning
$3.50
Chemical treatment
$25.00
Styling
$10.00
Hair Washing
Conditioning
Chemical Treatment
Styling
Haircut
1
1
0
0
Complete style
1
1
0
1
Perm
2
3
1
1
Highlights
3
4
2
1
Using the above information, determine the per-unit cost of each service and use the chart below.
If the company budgets 10,000 haircuts, 4,000 complete styles, 3,500 perms, and 5,500 highlights,
determine the total cost of services (using the chart below).
Services
Per-Unit Cost (a)
Total # of Services
Total Cost (b)
Haircut
10,000
Complete Style
4,000
Perm
3,500
Highlights
5,500
The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows:
Activity
Activity Rate
Hair washing
$4.00
Conditioning
$3.50
Chemical treatment
$25.00
Styling
$10.00
Hair Washing
Conditioning
Chemical Treatment
Styling
Haircut
1
1
0
0
Complete style
1
1
0
1
Perm
2
3
1
1
Highlights
3
4
2
1
Explanation / Answer
Per Unit Cost of Services are as calculated below:
Hair Washing Conditioning Chemical Treatment Styling Per Unit Cost (a) Total number of Services Total Cost (b) Haircut 1*4 1*3.5 0 0 7.5 10,000 75,000 Complete style 1*4 1*3.5 0 1*10 17.5 4,000 70,000 Perm 2*4 3*3.5 1*25 1*10 53.5 3,500 187,250 Highlights 3*4 4*3.5 2*25 1*10 86.0 5,500 473,000 805,250Related Questions
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