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Module 1 Concept Test

The document outlines the financial details of Legendary Barbershop, including average haircut prices and various monthly expenses such as rent, utilities, and stylist wages. It requires classification of these costs into direct or indirect, product or period, and variable or fixed categories. A table format is suggested for organizing this information effectively.

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sacey20.hb
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3 views

Module 1 Concept Test

The document outlines the financial details of Legendary Barbershop, including average haircut prices and various monthly expenses such as rent, utilities, and stylist wages. It requires classification of these costs into direct or indirect, product or period, and variable or fixed categories. A table format is suggested for organizing this information effectively.

Uploaded by

sacey20.hb
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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CONCEPT TEST 1 (25 MARKS)

Legendary barbershop is a hair salon located in Polokwane, Mall of the North. The salon
offers men’s haircut, at an average price of R600 per haircut. Below are expenses relating
to the salon for this month:

2 2
 The rent expense is R1 250 per m . The size of the barbershop is 20 m and cannot
be altered in the short run.
 Water and electricity for the barbershop amounted to R2 500 for this month. The
water and electricity usage generally varies with each haircut with the exception of
20% of the cost which is attributable to keeping the lights on throughout the day.
 The hairstylists are paid R25 per hour worked.
 Other paid expenses, amount to R2 000 a month. Although a detailed breakdown of
other expenses was not provided, the information below:
 Cleaning cost (detergents and cleaning cloths) of R200. - The barbershop is
swept as and when required. The cleaning costs remain at R200 where less
than 50 haircuts are performed, but increases to R300 where 100 haircuts are
performed, then to R400 where 150 haircuts are performed.
 The balance of other expenses relates to shampoo, gel and powder used during
haircuts. The shampoo, gel and powder depends on the number of haircuts
performed.
 The barbershop rents a vehicle under a vehicle, they vehicle rental costs R200 per
kilometer excluding fuel.
 The shavers and other equipment (scissors, comb, towel, cape, razors, broom etc.)
cost R 9 000 and have an expected useful life of 5 years. The furniture in the
barbershop has been there since inception and is fully depreciated.

A. REQUIRED:
(ii) Classify the costs above as either:

(a) Direct or Indirect, and


5

(b) Product or Period cost 5

(c) Variable or Fixed; 5


Use a table format, example:
Cost Item Direct/Indirect Product or period cost Variable/Fixed

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