Question

Kimberly's Cutting Station offers a new concept in haircuts: low cost and very quick. Set in a local mall, Kimberly's offers 15-minute haircuts with a shampoo for harried shoppers who do not have time for lengthy appointments. To ensure that the clients are in and out quickly, Kimberly schedules her 4 employees based on expected client traffic. Each of the employees is paid $1300 per month, with part of their pay coming from client tips. Kimberly pays rent and overhead costs of $3000 per month for the facility. Because of the quick nature of the service, Kimberly doesn't have time to clean combs in between clients, so she uses a new comb for each customer, at a cost of $0.60 each. She also provides shampoo and conditioner for each client at a cost of $0.95 per client. The average price for a haircut is $14, Kimberly pays herself $5700 per month. What are Kimberly's fixed costs for the month? $9500 $10900 $8200 $13900

Answer 1

The correct answer is $13,900
Employees Salaries ($1,300 x 4)	$5,200
Rent & Overhead Costs	$3,000
Kimberly Salary	$5,700
Total Fixed Costs	$13,900