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Chapter 16: SE12 (page 889)

Calculating unit cost per service

Marx and Tyler provides hair-cutting services in the local community. In February, the business cut the hair of 190 clients, earned \(4,800 in revenues, and incurred the following operating costs:

Hair Supplies Expense \) 950

Wages Expense 548

Utilities Expense 190

Depreciation Expense鈥擡quipment 60

What was the cost of service to provide one haircut?

Short Answer

Expert verified

The cost of service to provide one haircut is $9.2

Step by step solution

01

Computation of total cost

02

Computation of Cost to service to provide one haircut

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Most popular questions from this chapter

Question:Determining flow of costs through a manufacturer鈥檚 inventory accounts

Root Shoe Company makes loafers. During the most recent year, Root incurred total manufacturing costs of \(26,300,000. Of this amount, \)2,000,000 was direct materials used and \(19,800,000 was direct labor. Beginning balances for the year were Direct Materials, \)700,000; Work-in-Process Inventory, \(1,500,000; and Finished Goods Inventory, \)400,000. At the end of the year, balances were Direct Materials, \(800,000; Work-in-Process Inventory, \)1,200,000; and Finished Goods Inventory, $600,000.

Requirements Analyze the inventory accounts to determine:

1. Cost of direct materials purchased during the year.

2. Cost of goods manufactured for the year.

3. Cost of goods sold for the year.

Preparing a schedule of cost of goods manufactured Wilson Corp., a lamp manufacturer, provided the following information for the year ended December 31, 2018:

Balances: Beginning Ending

Direct Materials \( 59,000 \) 23,000

Work-in-Process Inventory 109,000 62,000

Finished Goods Inventory 41,000 44,000

Other information:

Depreciation, plant building and equipment $ 16,000

Direct materials purchases 151,000

Insurance on plant 24,000

Sales salaries 47,000

Repairs and maintenance鈥攑lant 10,000

Indirect labor 39,000

Direct labor 121,000

Administrative expenses 60,000

Requirements 2. What is the unit product cost if Wilson manufactured 3,700 lamps for the year?

Preparing an income statement and calculating unit cost for a service company

The Glass Doctors repair chips in car windshields. The company incurred the following operating costs for the month of July 2018:

Salaries and wages \( 10,000

Windshield repair materials 4,100

Depreciation on truck 500

Depreciation on building and equipment 900

Supplies used 450

Utilities 4,550

The Glass Doctors earned \)25,000 in service revenues for the month of July by repairing 250 windshields. All costs shown are considered to be directly related to the repair service.

Requirements

1. Prepare an income statement for the month of July.

2. Compute the cost per unit of repairing one windshield, rounded to the nearest cent.

3. The manager of The Glass Doctors must keep unit operating cost below $80 per windshield in order to get his bonus. Did he meet the goal?

Preparing an income statement and calculating unit cost for a merchandising company

Dillon Young owns Dillon鈥檚 Pets, a small retail shop selling pet supplies. On December 31, 2018, the accounting records for Dillon鈥檚 Pets showed the following:

Merchandise Inventory on December 31, 2018 $ 10,500

Merchandise Inventory on January 1, 2018 16,000

Net Sales Revenue 56,000

Utilities Expense for the shop 3,200

Rent for the shop 4,100

Sales Commissions 2,750

Purchases of Merchandise Inventory 25,000

Requirements

1. Prepare an income statement for Dillon鈥檚 Pets for the year ended December 31, 2018.

2. Dillon鈥檚 Pets sold 5,550 units. Determine the unit cost of the merchandise sold, rounded to the nearest cent.

How do manufacturing companies differ from merchandising companies?
See all solutions

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