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Account Analysis Method Penny Hassan runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts: Wages January $1,750 February 1,698 March 1,836 Supplies and Maintenance $1,422 1,860 4,050 Wages Supplies & Maintenance Equipment Depreciation Equipment Depreciation $129 129 129 Electricity $350 414 663 Account Balance Tanning Minutes 4,119 3,888 6,639 Number of Visits 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 423 384 573

Account Analysis Method Penny Hassan runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts: Wages January $1,750 February 1,698 March 1,836 Supplies and Maintenance $1,422 1,860 4,050 Wages Supplies & Maintenance Equipment Depreciation Equipment Depreciation $129 129 129 Electricity $350 414 663 Account Balance Tanning Minutes 4,119 3,888 6,639 Number of Visits 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 423 384 573

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter3: Cost Behavior
Section: Chapter Questions
Problem 15E: Penny Davis runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some...
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Account Analysis Method Penny Hassan runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts: Wages January $1,750 February 1,698 March 1,836 Supplies and Maintenance $1,422 1,860 4,050 Wages Supplies & Maintenance Equipment Depreciation Equipment Depreciation $129 129 129 Electricity $350 414 663 Account Balance Tanning Minutes 4,119 3,888 6,639 Number of Visits 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 423 384 573
Transcribed Image Text:Account Analysis Method Penny Hassan runs the Shear Beauty Salon near a college campus. Several months ago, Penny used some unused space at the back of the salon and bought two used tanning beds. She hired a receptionist and kept the salon open for extended hours each week so that tanning clients would be able to use the benefits of their tanning packages. After three months, Penny wanted additional information on the costs of the tanning area. She accumulated the following data on four accounts: Wages January $1,750 February 1,698 March 1,836 Supplies and Maintenance $1,422 1,860 4,050 Wages Supplies & Maintenance Equipment Depreciation Equipment Depreciation $129 129 129 Electricity $350 414 663 Account Balance Tanning Minutes 4,119 3,888 6,639 Number of Visits 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 423 384 573
Equipment Depreciation Electricity Tanning Minutes Number of Visits 2. Calculate fixed monthly cost and the variable rates for the account averages. Round your answers to the nearest cent and use your rounded answers in all subsequent computations. AVA Variable rate for supplies & maintenance Variable rate for electricity Fixed cost per month Cost Express the results in the form of an equation for total cost. (Round to the nearest cent.) = per visit per minute (visit) (minute) 3. In April, Penny predicts there will be 372 visits for a total of 3,690 minutes. What is the total cost for April? If required, round your answer to the nearest dollar. 4. Suppose that Penny decides to buy a new tanning bed at the beginning of April for $6,336. The tanning bed is expected to last four years and will have no salvage value at the end of that time.
Transcribed Image Text:Equipment Depreciation Electricity Tanning Minutes Number of Visits 2. Calculate fixed monthly cost and the variable rates for the account averages. Round your answers to the nearest cent and use your rounded answers in all subsequent computations. AVA Variable rate for supplies & maintenance Variable rate for electricity Fixed cost per month Cost Express the results in the form of an equation for total cost. (Round to the nearest cent.) = per visit per minute (visit) (minute) 3. In April, Penny predicts there will be 372 visits for a total of 3,690 minutes. What is the total cost for April? If required, round your answer to the nearest dollar. 4. Suppose that Penny decides to buy a new tanning bed at the beginning of April for $6,336. The tanning bed is expected to last four years and will have no salvage value at the end of that time.
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