Problem 221A Vin Diesel owns the Fredonia Barber Shop He emp

Problem 22-1A Vin Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base rate of $1,480 per month. One of the barbers serves as the manager and receives an extra $510 per month. In addition to the base rate, each barber also receives a commission of $5.52 per haircut. Other costs are as follows Advertising Rent Barber supplies Utilities Magazines $290 per mont $980 per month $0.32 per haircut $180 per month plus $0.24 per haircut $25 per month Vin currently charges $11.08 per haircut. Your answer is partially correct. Try again Determine the variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.) Total variable cost per haircut 6.08 Total fixed

Solution

1 Total variable cost per haircut = 5.52+0.32+0.24= $6.08 Total fixed = (5*1480)+510+290+980+180+25= $9385 2 Break even point = 9385/(11.08-6.08)= 1877 haircuts Break even point = 1877*11.08= $20797 3 Net income = 2420*(11.08-6.08)-9385= $2715