Reference no: EM133126113

Question - Sarah's Cutting Station offers a new concept in haircuts; low cost and very quick. Set in a local mall, Sarah's offers 15-minute haircuts for harried shoppers who do not have time for lengthy appointments. To ensure that the clients are in and out quickly, she schedules her 5 employees based on expected client traffic. Each of the employees is paid $1210 per month, with part of their pay coming from client tips. Sarah pays rent and overhead costs of $2300 per month on the facility. Because of the quick nature of the service, Sarah doesn't have time to clean combs in between clients, so she uses a new comb for each customer, at a cost of $0.60 each. She also provides shampoo and conditioner for each client at a cost of $1.00 per client. The average price for a haircut is $13. Sarah pays herself $5200 per month. What is Sarah's contribution margin per haircut?