Question

Salon de Beauty, a local hair salon, incurred the following costs last month. (Hint: Treat Salon utilities as Variable cost)

Salon rent	$	2,200
Salon utilities (electric and water)	$	930
Hairstylists’ salaries	$	5,400
Hairstylists’ commissions (a percentage of sales)	$	3,600
Depreciation on fixtures and equipment	$	800
Shampoo and conditioner (only a small amount is used on each customer)	$	230
Insurance	$	1,850
Advertising	$	1,600
Store manager’s salary	$	3,600
Hair dye and perm kits (each dye job or perm uses one kit)	$	350

Calculate each of the following, where the cost object is customers served:

a. Total variable costs.

b. Total fixed costs.

c. Total direct costs.

d. Total indirect costs.

Answer 1

a. Total variable costs.
Hairstylists’ commissions (a percentage of sales)	$            3,600
Hair dye and perm kits (each dye job or perm uses one kit)	$               350
Shampoo and conditioner	$               230
Total	$            4,180
b. Total fixed costs.
Salon rent	$            2,200
Hairstylists’ salaries	$            5,400
Depreciation on fixtures and equipment	$               800
Insurance	$            1,850
Advertising	$            1,600
Store manager’s salary	$            3,600
Total Fixed Cost	$         15,450
c. Total direct costs.
Hairstylists’ commissions (a percentage of sales)	$            3,600
Hair dye and perm kits (each dye job or perm uses one kit)	$               350
Total	$            3,950
d. Total indirect costs.
Salon rent	$            2,200
Hairstylists’ salaries	$            5,400
Depreciation on fixtures and equipment	$               800
Insurance	$            1,850
Advertising	$            1,600
Store manager’s salary	$            3,600
Salon utilities	$               930
Shampoo and conditioner	$               230
Total	$         16,610