Question

Account Analysis Method Penny Davis 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 Supplies and Maintenance Equipment Depreciation Electricity Tanning Minutes Number of Visits

January $1,750 $1,450 $150 $300 4,100 410
February 1,670 1,900 150 410 3,890 380
March 1,800 4,120 150 680 6,710 560

Penny decided that wages and equipment depreciation were fixed.She thought supplies and maintenance would vary with the number oftanning visits and that electricity would vary with the number oftanning minutes.

Required:
Calculate the average account balance foreach account.

Answer 1

Shear Beauty Salon

Average account balance for each account:

Wages Supplies Equipment Electricity

& Depreciation

Maintenance

Average

balance $1,740 $2,490 $150 $463

Step-by-step explanation:

a) Data and Analysis:

Wages Supplies Equipment Electricity Tanning No.

& Depreciation Minutes of

Maintenance Visits

January $1,750 $1,450 $150 $300 4,100 410

February 1,670 1,900 150 410 3,890 380

March 1,800 4,120 150 680 6,710 560

Total $5,220 $7,470 $450 $1,390 14,700 1,350

Total $5,220/3 $7,470/3 $450/3 $1,390/3

Average

balance $1,740 $2,490 $150 $463