Account Analysis Method

Penny Hassan 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:

Penny decided that wages and equipment depreciation were fixed. She thought supplies and maintenance

would vary with the number of tanning visits and that electricity would vary with the number of tanning

minutes.

Required:

Calculate the average account balance for each account. Calculate the average monthly amount for

each of the two drivers. $($Round all answers to the nearest dollar or the nearest whole unit.$)$ Use your

rounded answers in all subsequent computations.

Average

Account Balance

Calculate fixed monthly cost and the variable rates for the account averages. Round your answers to

the nearest cent and use your rounded answers in all subsequent computations.

Variable rate for supplies & maintenance $,$$

per visit

Variable rate for electricity

$

per minute

Fixed cost per month

$

Express the results in the form of an equation for total cost. $($Round to the nearest cent.$)$

Cost $=$$$,+$$$,($visit$)+$$$,($minute$)$

In April, Penny predicts there will be $342$ visits for a total of $3,690$ minutes. What is the total cost for

April? If required, round your answer to the nearest dollar.

$$

Suppose that Penny decides to buy a new tanning bed at the beginning of April for $$8,448.$ The tanning

bed is expected to last four years and will have no salvage value at the end of that time.

What will be the new equation for total cost? If required, round your answers to the nearest cent.

$\backslash$table$[[$Cost $=$$$,+$$$,($visit$)+$$$,($minute$)]]$

What is the new expected cost in April based on the prediction provided in Requirement $3($above$)?$ When

required, round your answer to the nearest dollar.

$