TOTAL MONTHLY FIXED COST
Salaries(1500×5) | $7500 |
Extra manager salary | $540 |
Advertising | $230 |
Rent | $980 |
Utilities | $170 |
Magazine | $30 |
TOTAL MONTHLY FIXED COST | $9450 |
TOTAL VARIABLE COST PER HAIRCUT
Commission | $5.77 |
Supplies |
$0.36 |
Utilities | $0.30 |
TOTAL VARIABLE COST PER HAIRCUT | $6.43 |
Break even point in unit and dollars
Selling price per hair | $11.43 |
Variable cost | ($6.43) |
Contribution margin | $5.00 |
BREAK EVEN POINT (IN UNITS)= TOTAL MONTHLY FIXED COST/CONTRIBUTION MARGIN PER UNIT
= $9450/$5.00= 1890 units
BREAK EVEN POINT(in dollars) =BREAK EVEN UNITS×SELLING PRICE PER HAIRCUT
= 1890units ×11.43 = $21603(rounded)
COMPUTE NET INCOME Assuming 2500 haircuts in a month
selling price (11.43)×haircuts(2500)=$28575
Less VARIABLE COST
(2500×6.43). =(16075)
Less Fixed costs. = (9450)
NET INCOME. = 3050
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