Use the information below to answer the following questions.
Jan runs a successful hairdressing salon in the CBD. The type of costs incurred in providing services to clients are:
(i) hairdressers' salaries
(ii) shampoo and conditioner (no individual records kept of usage)
(iii) colour and perm solutions (individual records kept of usage per client)
(iv) electricity and gas
(v) depreciation of equipment
-Refer to the information above. The direct costs incurred in providing a perm to a client would be:

Question

Quizplus · Accepted Answer

Direct costs are costs that are specifically related to the production of a product or service, and can be traced directly to a specific cost object. In this case, the direct costs for providing a perm to a client would be the hairdresser's salary (since they are directly involved in providing the service), and the colour and perm solution (since individual records are kept of usage per client). Shampoo and conditioner as well as other overhead costs like electricity and gas or depreciation of equipment are indirect costs, as they cannot be traced directly to a specific service provided. Therefore, the best choice is D, since it includes only the direct costs related to providing a perm.

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