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Question - Vin Diesel owns the Fredonia Barber Shop. He employs 4 barbers and pays each a base rate of $1,250 per month. One of the barbers serves as the manager and receives an extra $500 per month. In addition to the base rate, each barber also receives a commission of $4.50 per haircut.
Advertising $200 per month
Rent $1,100 per month
Barber supplies $0.30 per haircut
Utilities $175 per month plus $0.20 per haircut
Magazines $25 per month
Vin currently charges $10 per haircut.
Required -
(a) Determine the variable costs per haircut and the total monthly fixed costs.
(b) Compute the break-even point in units and dollars.
(c) Determine net income, assuming 1,600 haircuts are given in a month.
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