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Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
Edition 2ISBN: 978-1111824402 Exercise 35
Process Costing, Service Organization
A local barbershop cuts the hair of 1,200 customers per month. The clients are men, and the barbers offer no special styling. During the month of May, 1,200 customers were serviced. The cost of haircuts includes the following:
Required:
1. Explain why process costing is appropriate for this haircutting operation.
2. Calculate the cost per haircut.
3. Can you identify some possible direct materials used for this haircutting service? Is the usage of direct materials typical of services? If so, provide examples of services that use direct materials. Can you think of some services that would not use direct materials?
A local barbershop cuts the hair of 1,200 customers per month. The clients are men, and the barbers offer no special styling. During the month of May, 1,200 customers were serviced. The cost of haircuts includes the following:
Required:
1. Explain why process costing is appropriate for this haircutting operation.
2. Calculate the cost per haircut.
3. Can you identify some possible direct materials used for this haircutting service? Is the usage of direct materials typical of services? If so, provide examples of services that use direct materials. Can you think of some services that would not use direct materials?
Explanation
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The data about a local barber shop is gi...
Cornerstones of Cost Management 2nd Edition by Don Hansen ,Maryanne Mowen
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