Problem 221A SAVE FOR LATER SUBMIT ANSWER Problem 221A Vin D

Problem 22-1A

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SUBMIT ANSWER

Problem 22-1A Vin Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,370 per month. One of the barbers serves as the manager and receives an extra $530 per month. In addition to the base rate, each barber also receives a commission of $5.84 per haircut. Other costs are as follows. Advertising $250 per month Rent $960 per month Barber supplies $0.44 per haircut Utilities $170 per month plus $0.37 per haircut Magazines $25 per month Vin currently charges $11.65 per haircut.

Solution

Ans 1 Variable cost per hair cut Commission $5.84 Barber supplies 0.44 Utilities 0.37 Total Variable cost per hair cut $6.65 Fixed cost Barber\'s salaries (1370*7) 9590 Manager salaries 530 Advertising $250 Rent $960 Utilities $170 Magazines $25 Total fixed cost 11525 ans 2 Selling price $11.65 Less; variable cost $6.65 Contribution Margin $5.00 Contribution Margin Ratio 0.429 Breakeven point in haircuts Fixed cost/CM 2305 haircuts 11525/5 Breakeven point in dollars Fixed cost/CM ratio 26853 haircuts 11525/.429 ans 3 sales (11.65*2440) $28,426.00 Less; variable cost (6.65*2440) $16,226.00 Contribution Margin $12,200.00 Less: fixed cost 11525 Net Income $675.00 If any doubt please comment