Telly Savalas owns the Bonita Barber Shop. He employs 6 barbers and pays each a
ID: 2424421 • Letter: T
Question
Telly Savalas owns the Bonita Barber Shop. He employs 6 barbers and pays each a base rate of $1,100 per month. One of the barbers serves as the manager and receives an extra $550 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 Rent Barber supplies Utilities Magazines $310 per month $920 per month $0.30 per haircut $170 per month plus $0.40 per haircut $20 per month Telly currently charges $11.50 per haircut. 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 Total fixed LINK TO TEXT LINK TO TEXT VIDEO: SIMILAR PROBLEMExplanation / Answer
Statement showing computations Particulars Amount Variable Costs per Haircut: Commission per Haircut 5.60 Barber Supplies per haircut 0.30 Utilities per Haircut 0.40 Total Variable Costs per haircut 6.30 Fixed Costs: Advertising 310.00 Rent 920.00 Utilities 170.00 Magazines 20.00 Base salaries of 6 barbers = 6*1100 6,600.00 Additional salary of manager 550.00 Total fixed costs 8,570.00 SP per haircut 11.50 VC er haircut 6.30 Contribution per haircut = 11.50-6.30 5.20 PV Ratio or cont ratio = 5.20/11.50 *100 45.217% Fixed Cosst 8,570.00 BEP in units = FC/ Cont per unit = 8570/5.20 1,648.08 BEP in $ = 1648.08 *11.50 18,952.88 No of haircuts 2,370.00 Total Cont = 2370*5.20 12,324.00 Fixed Cosst 8,570.00 Income = Contribution - FC 3,754.00
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