Q23E_2 - Horngren'S Financial And Managerial Accounting

Question

Calculating income and cost per service for a service company 

Buddy Grooming provides grooming services for pets. In April, the company earned \(16,300 in revenues and incurred the following operating costs to groom 660 dogs:

Wages Expense                                        \) 4,061 

Grooming Supplies Expense                    1,675 

Building Rent Expense                                900 

Utilities Expense                                          305 

Depreciation Expense—Equipment          55

Requirements 2. What is the cost of service to groom one dog?

Step-by-Step Solution

Answer

The cost of service to groom one dog will be $10.6. 

Step-by-Step Solution Step 1: Definition of Wages Expense

The wages expense is defined as the expense incurred by the business on paying the employees of the company.

Step 2: Computation of Cost of service to groom one dog

$$\begin{gathered} \mathbf{Cost}\mathbf{ }\mathbf{of}\mathbf{ }\mathbf{Service}\mathbf{ }\mathbf{to}\mathbf{ }\mathbf{groom}\mathbf{ }\mathbf{one}\mathbf{ }\mathbf{dog}\mathbf{=}\frac{\mathrm{Total} \mathrm{Expense}}{\mathrm{Number} \mathrm{of} \mathrm{services} \mathrm{provided}} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\frac{\$6,996}{660} \\ \mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{ }\mathbf{=}\mathbf{\$}\mathbf{10}\mathbf{.}\mathbf{6} \end{gathered}$$