Reference no: EM132594342
Bryan owns the Freedom Barber Shop. He employs four 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 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
Bryan currently charges $10 per haircut.
Instructions
Question 1: Determine the variable costs per haircut and the total monthly fixed costs.
Question 2: Compute the break-even point in units and dollars.
Question 3: prepare a CVP graph, assuming a maximum of 1,800 haircuts in a month. Use increments of 300 haircuts on the horizontal axis and $3,000 on the vertical axis.
Question 4: Determine net income, assuming 1,600 haircuts are given in a month.