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)	$	810
Hairstylists’ salaries	$	5,700
Hairstylists’ commissions (a percentage of sales)	$	3,200
Depreciation on fixtures and equipment	$	750
Shampoo and conditioner (only a small amount is used on each customer)	$	270
Insurance	$	1,350
Advertising	$	2,000
Store manager’s salary	$	2,500
Hair dye and perm kits (each dye job or perm uses one kit)	$	380

Calculate each of the following, where the cost object is customers served:
1. Total direct costs.

2. Total indirect costs.

Answer 1

		Direct cost	Indirect cost
Salon rent	2200		2200
Salon utilities	810		810
Hairstylists salaries	5700		5700
Hairstylists commissions	3200	3200
Depreciation on fixtures and equipment	750		750
Shampoo and conditioner	270		270
Insurance	1350		1350
Advertising	2000		2000
Store manager's salary	2500		2500
Hair dye and perm kits	380	380
Total		3580	15580