Problem 18-1A Telly Savalas owns the Bonita Barber Shop. He employs 6 barbers an
ID: 2477113 • Letter: P
Question
Problem 18-1A Telly Savalas owns the Bonita Barber Shop. He employs 6 barbers and pays each a base rate of $1,200 per month. One of the barbers serves as the manager and receives an extra $540 per month. In addition to the base rate, each barber also receives a commission of $5.60 per haircut. Other costs are as follows. Advertising $230 per month Rent $920 per month Barber supplies $0.50 per haircut Utilities $170 per month plus $0.20 per haircut Magazines $20 per month Telly currently charges $11.50 per haircut. Partially correct answer. Your answer is partially correct. Try again. Determine the variable cost per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.) Total variable cost per haircut $ Entry field with correct answer Total fixed $ Entry field with incorrect answer Incorrect answer. Your answer is incorrect. Try again. Compute the break-even point in units and dollars. (Do not round any intermediate calculations and round only answers to 0 decimal places, e.g. 1,225.) Break-even point Entry field with incorrect answer haircuts Break-even point $ Entry field with incorrect answer Incorrect answer. Your answer is incorrect. Try again. Determine net income, assuming 2,440 haircuts are given in a month. Net income $ Entry field with incorrect answer
Explanation / Answer
Answer:(a)
Answer:(b) BEP (units)=Fixed cost/Contribution margin per hair
=9080/(11.50-6.3)
=1746.15 hair cuts
BEP ($)=1746.15*$11.50=$20080.73
Answer: Net income=(2440*5.2)-9080
=3608
Particulars Cost per hair Variable cost: Commission 5.6 Supplies 0.5 utilities 0.2 Total variable cost 6.3 Per month Fixed cost: Wages (6*1200+1*540) 7740 Advertising 230 Rent 920 Utilities 170 Magazines 20 Total fixed costs 9080