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What price should Heavenly Day Spa charge

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Reference no: EM133007268

Question - Costing and Pricing - Heavenly Day Spa uses a costing system for all customers who have treatment at their day spa. The day spa uses a pre-determined indirect cost rate for allocating indirect costs to individual customer visits, allocating indirect costs at the rate of $22 per hour.

Customer Jenny James will be in the Day Spa for two hours during September.

The direct costs related to Jenny's two hour visit include:

Direct Materials

Direct Labour

Cost of products used

$12

Cost of Therapist

$20/hour

Other supplies

$4

 

 

Required -

a) Calculate the full cost (direct costs + indirect costs) of Jenny James' two hour visit.

b) Assume the Day Spa applies a cost-based pricing model to set prices to customers, adding a mark-up of 30%. What price should Heavenly Day Spa charge Jenny James for her visit.

Reference no: EM133007268

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