Question

The Beauty Beyond Words Salon uses an activity-based costing system in its beauty salon to determine the cost of services. The salon has determined the costs of services by activity as follows: Activity Activity Rate Hair washing $4.00 Conditioning $3.50 Chemical treatment $25.00 Styling $10.00 ​ 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 ​ ​

Using the above information, determine the per-unit cost of each service and use the chart below.

If the company budgets 10,000 haircuts, 4,000 complete styles, 3,500 perms, and 5,500 highlights,

determine the total cost of services (using the chart below).

Services	Per-Unit Cost (a)	Total # of Services	Total Cost (b)
Haircut		10,000
Complete Style		4,000
Perm		3,500
Highlights		5,500

Answer 1

Per Unit Cost of Services are as calculated below:

	Hair Washing	Conditioning	Chemical Treatment	Styling	Per Unit Cost (a)	Total number of Services	Total Cost (b)
Haircut	1*4	1*3.5	0	0	7.5	10,000	75,000
Complete style	1*4	1*3.5	0	1*10	17.5	4,000	70,000
Perm	2*4	3*3.5	1*25	1*10	53.5	3,500	187,250
Highlights	3*4	4*3.5	2*25	1*10	86.0	5,500	473,000
							805,250