Find the contribution margin per haircut

Assignment Help Accounting Basics

Reference no: EM13757612

Consider the following scenario:

Andre has asked you to evaluate his business, Andre's Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40-hour week and a 50-week year, regardless of the number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on all clients is $0.40 per client. Assume that the only service performed is the giving of haircuts (including shampoo), the unit price of which is $12. Andre has asked you to find the following information.

Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost. Show calculations to support your answer.
Determine the annual break-even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer.
What will be the operating income if 20,000 haircuts are performed? Show calculations to support your answer.

Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)? Show calculations to support your answer.

Reference no: EM13757612

Questions Cloud

Discuss the preliminary design issues you experienced : Discuss the preliminary design issues you experienced in creating your survey. Describe the specific instructions for administering, scoring, and interpreting your survey.

What competitors might overtake it : In 10 years, will Facebook still be so popular and so dominant? What competitors might overtake it? What are some substitute products for social networking sites such as Facebook

Many of the major contributors to ethical theory : Many of the major contributors to ethical theory were described in your Chapter 1 eGuide. Your Project Assignment is to select one of the major contributors listed on the next page and prepare a written Project. Select one of the major contributors l..

Maximizing profits and minimizing losses : Create a report that includes a discussion and analysis regarding how such a supplier makes such a determination in order to maximize the firm's profits. Include in your response:

Find the contribution margin per haircut : Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost. Show calculations to support your answer.

Analyze the meaning and prosody of anne bradstreets poem : Analyze the meaning and prosody of Anne Bradstreet's poem. Also, be able to demonstrate an awareness of the prosody of each poem you analyze from any author above.

Reduce buyer power as a supplier : Porter's Five Forces Model: In what ways could your organization use its supply chain management system to: (1) reduce buyer power as a supplier, (2) reduce supplier power as a buyer

Write a critical analysis of psychological approach : Write a critical analysis of Psychological, gender, sociological, biographical, and historical approach that many use naturally in viewing a work.

Write a paper on should unpaid internships be illegal : Write a paper on Should Unpaid Internships Be Illegal.

User Account

All Pages