Final answer:
Standard cost for a unit of 'Magic' can be calculated by adding fixed costs, which remain constant, to variable costs, which change with production levels, and then dividing by the number of units produced.
Step-by-step explanation:
To calculate the standard cost for one unit of 'Magic' for Al Salam Bhd, we must understand that total costs consist of both fixed costs and variable costs. Fixed costs, such as rent, utilities, and equipment, remain constant regardless of the production level. Variable costs fluctuate with the production volume and can include materials, labor, and other costs directly associated with production.
For example, if the fixed costs to operate a manufacturing facility are $160 per day, and the variable cost per worker is $80 per day, then to calculate the total cost for any given level of production, we would sum the fixed costs with the total variable costs (number of workers multiplied by $80). Once we have the total cost, we would then calculate the cost per unit by dividing the total costs by the number of units produced.
In contexts like a barber shop, where the costs are related to service rather than manufacturing, the principle remains the same. After calculating the total cost, we normalize it, for example, to the cost per haircut to compare across different options or to establish the standard cost per unit of service.