Carla Vista Diesel owns the Fredonia Barber Shop. He employs 7
barbers and pays each a base rate of $1,310 per month. One of the
barbers serves as the manager and receives an extra $530 per month.
In addition to the base rate, each barber also receives a
commission of $5.50 per haircut.
Other costs are as follows.
Advertising | $210 | per month | |
Rent | $920 | per month | |
Barber supplies | $0.46 | per haircut | |
Utilities | $180 | per month plus $0.34 per haircut | |
Magazines | $30 | per month |
Carla Vista currently charges $12.30 per haircut.
Determine the variable costs per haircut and the total monthly
fixed costs. (Round variable costs to 2 decimal places,
e.g. 2.25.)
Total variable cost per haircut |
$ |
|
Total fixed |
$ |
Compute the break-even point in units and dollars.
Break-even point | haircuts | ||
Break even sales |
$ |
Determine net income, assuming 2,330 haircuts are given in a
month.
Net income / (Loss) |
$ |
Solution
Total Variable cost per Haircut | $ 6.30 | |
Total Fixed cost | $ 11,040.00 |
.
Break-even point in units | 1,840 |
Break-even point in dollars | $ 22,632.00 |
.
Income statement at 2330 haircuts | |
Sales revenue | $ 28,659.00 |
Variable costs | $ 14,679.00 |
Contribution margin | $ 13,980.00 |
Fixed cost | $ 11,040.00 |
Net income | $ 2,940.00 |
Working
Variable costs | Amount | |
Barber supplies | $ 0.46 | |
Utilities | $ 0.34 | |
Commission | $ 5.50 | |
Total Variable cost per Haircut | $ 6.30 |
.
Fixed costs | ||
Advertising | $ 210.00 | |
Rent | $ 920.00 | |
Utilities | $ 180.00 | |
Magazines | $ 30.00 | |
Barber salaries | (7*1310)+530 | $ 9,700.00 |
Total Fixed cost | $ 11,040.00 |
Carla Vista Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a...
Carla Vista Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1.200 per month. One of the barbers serves as the manager and receives an extra $555 per month. In addition to the base rate, each barber also receives a commission of $5.90 per haircut. Other costs are as follows. Advertising Rent Barber supplies Utilities Magazines $300 per month $1.010 per month $0.50 per haircut $170 per month plus $0.10 per haircut...
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Ivanhoe Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base rate of $1,380 per month. One of the barbers serves as the manager and receives an extra $535 per month. In addition to the base rate, each barber also receives a commission of $3.75 per haircut. Other costs are as follows. Advertising $270 per month Rent $1,010 per month Barber supplies $0.50 per haircut Utilities $160 per month plus $0.15 per haircut Magazines $35...
Vin Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,640 per month. One of the barbers serves as the manager and receives an extra $510 per month. In addition to the base rate, each barber also receives a commission of $5.81 per haircut. Other costs are as follows. Advertising $200 per month Rent $960 per month Barber supplies $0.31 per haircut Utilities $185 per month plus $0.30 per haircut Magazines $30...
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