Question

Transformations Hair 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	$1.50
Conditioning	$2.00
Chemical treatment	$20.00
Styling	$10.00

a. Using the information provided, determine the cost of services for each of the following services provided by the salon:

	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

Please find the cost per unit for each of these. Round your answers to two decimal places, if necessary.

Hair Cuts	$___ per unit?
Style	$___ per unit?
Perms	$___ per unit?
Hi-Lights	$___ per unit?

b. If the company budgets 10,000 haircuts, 4,000 complete styles, 3,500 perms, and 5,500 highlights, determine the budget for cost of services for each of the listed items.

Services	Total Costs
Hair Cut	$
Complete Style	$
Perms	$
Hi-Lights	$
Total	$

Answer 1

Hair cuts (1.50*1)+(2*1)	3.50
Style (1*1.5)+(1*2)+(1*10)	13.50
Perms (2*1.5)+(3*2)+(1*20)+(1*10)	39
HI lights (3*1.5)+(4*2)+(2*20)+(1*10)	62.50

B

Hair cut (10,000*3.50)	35000
Complete style (4000*13.50)	54000
Perms (3500*39)	136500
Hi lights (5500*62.50)	343750
Total	569250