Transformations Hair Salon uses an activity-based costing system to determine the cost of services. The salon has determined the costs of services by activity as follows: Activity Activity Rate Hair washing $1.50 Conditioning 2.00 Chemical treatment 20.00 Styling 10.00 a. Using the information provided, determine the cost of services for each of the following services provided by the salon: 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 Round your answers to two decimal places, if necessary. Haircut $ per unit Complete style $ per unit Perm $ per unit Highlights $ per unit b. If the company budgets 10,000 haircuts, 4,000 complete styles, 3,500 perms, and 5,500 highlights, determine the budget for cost of services. Services Total Costs Haircut $ Complete style Perm Highlights Total $
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
Transformations Hair Salon uses an activity-based costing system to determine the cost of services. The salon has determined the costs of services by activity as follows:
|
Activity
|
Activity Rate
|
| Hair washing | $1.50 |
| Conditioning | 2.00 |
| Chemical treatment | 20.00 |
| Styling | 10.00 |
a. Using the information provided, determine the cost of services for each of the following services provided by the salon:
| 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 |
Round your answers to two decimal places, if necessary.
| Haircut | $ per unit |
| Complete style | $ per unit |
| Perm | $ per unit |
| Highlights | $ per unit |
b. If the company budgets 10,000 haircuts, 4,000 complete styles, 3,500 perms, and 5,500 highlights, determine the budget for cost of services.
| Services | Total Costs |
| Haircut | $ |
| Complete style | |
| Perm | |
| Highlights | |
| Total | $ |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
