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Determine the variable costs per haircut

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Reference no: EM131738635

Problem - 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.

Other costs are as follows.

Advertising$200 per monthRent$1,100 per month Barber supplies$0.30 per haircutUtilities$175 per month plus $0.20 per haircutMagazines$25 per month Vin currently charges $10 per haircut.

(a) Your answer is correct. 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$ 5.00

Total fixed$ 7000

(b) Your answer is incorrect. Try again. Compute the break-even point in units and dollars. (Round answers to 0 decimal places, e.g. 1,225.)

Break-even point 1400

Haircuts Break-even point$ 14,000

(c) Your answer is incorrect. Try again. Determine net income, assuming 1,600 haircuts are given in a month. (Round answer to 0 decimal places, e.g. 1,225.)

Reference no: EM131738635

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