Question

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—Equipment 60

What was the cost of service to provide one haircut?

Short answer

The cost to service to provide one haircut is $9.2

Step-by-step solution

Computation of total cost

$\begin{array}{c}\mathrm{Total}\mathrm{Cost}=\mathrm{Wages}+\mathrm{Hair}\mathrm{Supplies}+\mathrm{Utilities}\mathrm{expense}+\mathrm{Depreciation}\mathrm{expense}\\ =\mathrm{\$}548+\mathrm{\$}950+\mathrm{\$}190+\mathrm{\$}60\\ =\mathrm{\$}1,748\end{array}$

Computation of Cost to service to provide one haircut

$\begin{array}{c}\mathrm{Cost}\mathrm{to}\mathrm{service}\mathrm{to}\mathrm{provide}\mathrm{one}\mathrm{haircut}=\frac{\mathrm{Total}\mathrm{cost}}{\mathrm{Total}\mathrm{number}\mathrm{of}\mathrm{units}}\\ =\frac{\mathrm{\$}1,748}{190}\\ =\mathrm{\$}9.2\end{array}$