Account Analysis Method Penny Hassan runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts: Wages January $1,750 February 1,698 March 1,836 Supplies and Maintenance $1,422 1,860 4,050 Wages Supplies & Maintenance Equipment Depreciation Equipment Depreciation $129 129 129 Electricity $350 414 663 Account Balance Tanning Minutes 4,119 3,888 6,639 Number of Visits Penny decided that wages and equipment depreciation were fixed. She thought supplies and maintenance would vary with the number of tanning visits and that electricity would vary with the number of tanning minutes. Required: 1. Calculate the average account balance for each account. Calculate the average monthly amount for each of the two drivers. (Round all answers to the nearest dollar or the nearest whole unit.) Use your rounded answers in all subsequent computations. Average 423 384 573
Account Analysis Method Penny Hassan runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts: Wages January $1,750 February 1,698 March 1,836 Supplies and Maintenance $1,422 1,860 4,050 Wages Supplies & Maintenance Equipment Depreciation Equipment Depreciation $129 129 129 Electricity $350 414 663 Account Balance Tanning Minutes 4,119 3,888 6,639 Number of Visits Penny decided that wages and equipment depreciation were fixed. She thought supplies and maintenance would vary with the number of tanning visits and that electricity would vary with the number of tanning minutes. Required: 1. Calculate the average account balance for each account. Calculate the average monthly amount for each of the two drivers. (Round all answers to the nearest dollar or the nearest whole unit.) Use your rounded answers in all subsequent computations. Average 423 384 573
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Account Analysis Method
Penny Hassan runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and
bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able
to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She
accumulated the following data on four accounts:
Wages
January $1,750
February 1,698
March
1,836
Supplies and
Maintenance
$1,422
1,860
4,050
Wages
Supplies & Maintenance
Equipment Depreciation
Equipment
Depreciation
$129
129
129
Electricity
$350
414
663
Account Balance
Tanning
Minutes
4,119
3,888
6,639
Number
of Visits
Penny decided that wages and equipment depreciation were fixed. She thought supplies and maintenance would vary with the number of tanning
visits and that electricity would vary with the number of tanning minutes.
Required:
1. Calculate the average account balance for each account. Calculate the average monthly amount for each of the two drivers. (Round all answers
to the nearest dollar or the nearest whole unit.) Use your rounded answers in all subsequent computations.
Average
423
384
573
Transcribed Image Text:Equipment Depreciation
Electricity
Tanning Minutes
Number of Visits
2. Calculate fixed monthly cost and the variable rates for the account averages. Round your answers to the nearest cent and use your rounded
answers in all subsequent computations.
AVA
Variable rate for supplies & maintenance
Variable rate for electricity
Fixed cost per month
Cost
Express the results in the form of an equation for total cost. (Round to the nearest cent.)
=
per visit
per minute
(visit)
(minute)
3. In April, Penny predicts there will be 372 visits for a total of 3,690 minutes. What is the total cost for April? If required, round your answer to
the nearest dollar.
4. Suppose that Penny decides to buy a new tanning bed at the beginning of April for $6,336. The tanning bed is expected to last four years and will
have no salvage value at the end of that time.
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