Question

ent-take&inprogress-false AIO Print Item Account Analysis Method Penny Davis runs the Shear Beauty Salon near a college campus. Several months ago, Penny two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients woed benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accuraulated the folowing data on four accounts: used some unused space at the back of the salon and bought Number of Visits 402 396 564 Supplies and Maintenance Equipment Depreciation Tanning Minutes Wages January $1,798 February 1,692 1,812 $1,422 1,872 4,134 $123 123 123 365 429 705 4,125 3,879 6,633 March 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 Account Balance wages Supplies & Maintenance Next Check My Work more Check My Work uses remaining 814 PM 24/01/2019

Answer 1

1.

	Average Account Balance
Wages	$ 1,767
Supplies and Maintenance	$ 2,476
Equipment Depreciation	$ 123
Electricity	$ 500
Tanning Minutes	4,879 minutes
Number of Visits	454 visits

2.

Variable rate for supplies and maintenance	$ 5.45 per visit
Variable rate for electricity	$ 0.10 per minute
Fixed Cost	$ 1,890

Cost = $ 1,890 + $ 5.45 per visit + $ 0.10 per minute.

3. Total cost for April : $ 4,144.

Total cost for April = $ 1,890 + $ 5.45 x 342 + $ 0.10 x 3,900 = $ 4,143.90

4. Cost = $ 2,051 + $ 5.45 per visit + $ 0.10 per minute

New expected cost in April = $ 4,305

Monthly depreciation on new bed = $ 7,728 / ( 4 x 12 ) = $ 161.

Total depreciation expense per month = $ 123 + $ 161 = $ 284.

Total fixed cost per month = $ 1,767 + $ 284 = $ 2,051.