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Question - Sheridan Diesel owns the Fredonia Barber Shop. He employs 4 barbers and pays each a base rate of $1,400 per month. One of the barbers serves as the manager and receives an extra $560 per month. In addition to the base rate, each barber also receives a commission of $6.40 per haircut.
Other costs are as follows.
Advertising $260 per month
Rent $1,060 per month
Barber supplies $0.50 per haircut
Utilities $160 per month plus $0.10 per haircut
Magazines $25 per month
Sheridan currently charges $14 per haircut.
Required - Determine the variable costs per haircut and the total monthly fixed costs.
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