Reconsider Andre\'s Hair Styling operation (study problem 2-44), with some diffe
ID: 2453209 • Letter: R
Question
Reconsider Andre's Hair Styling operation (study problem 2-44), with some different facts. Assume that in 2014, Andre's barbers did 25,000 haircuts. He charged customers $16.00 per haircut, paid six barbers a salary of $55,000 each, and had miscellaneous fixed costs of $15,000.
Andre is considering changing the way he pays his barbers in 2015. He is considering paying each barber a salary of $22,000 plus $8.48 for each haircut s/he gives. He will continue to charge customers $16.00 per haircut, but miscellaneous fixed costs will increase to $16,000.
Andre is sure that if he continues paying his barbers as he has, the number of haircuts in 2015 will be the same as in 2014. However, he thinks that the new payment system would affect the number of haircuts given in 2015. How many haircuts must his barbers give in 2015 in order for Andre to be indifferent between the old and new payment plans?
Explanation / Answer
Reconsider Andre's Hair Styling operation (study problem 2-44), with some diffe
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