Question

I am having trouble finding the total direct and indirect cost. please show breakdown. Thank you!  

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

Salon rent	$	2,300
Salon utilities (electric and water)	$	870
Hairstylists’ salaries	$	5,500
Hairstylists’ commissions (a percentage of sales)	$	2,700
Depreciation on fixtures and equipment	$	830
Shampoo and conditioner (only a small amount is used on each customer)	$	380
Insurance	$	1,100
Advertising	$	1,200
Store manager’s salary	$	3,000
Hair dye and perm kits (each dye job or perm uses one kit)	$	440

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

a. Total variable costs.
$4390


b. Total fixed costs.
$13930


c. Total direct costs.



d. Total indirect costs.

Answer 1

Cost object is 'customer served'.
---Direct Cost will include all those cost that are directly incurred or are incurred in relation to the serving of the customer.

Direct Cost:
Shampoo and conditioner (only a small amount is used on each customer)	$380
Hair dye and perm kits (each dye job or perm uses one kit)	$440
Hairstylists’ commissions (a percentage of sales)	$2,700
Hairstylists’ salaries	$5,500
Total Direct Cost	$9,020

---Indirect Cost includes all those are that are incurred BUT they are not directly related to the serving of the customer.

Indirrect Costs:
Salon utilities (electric and water)	$870
Salon rent	$2,300
Depreciation on fixtures and equipment	$830
Insurance	$1,100
Advertising	$1,200
Store manager’s salary	$3,000
Total Indirect Cost	$9,300