PLEASE EXPLAIN YOURSELF Janice owns the Cute Cut Salon. She employs 5 stylists a

Question

PLEASE EXPLAIN YOURSELF

Janice owns the Cute Cut Salon. She employs 5 stylists and pays each a base salary of $1,800 per month. One of the stylists serves as the manager, receiving an extra $500 per month. In addition to the base salary, each stylist receives a commission of $5 per haircut. Each stylist can do as many as 25 haircuts a day, but the average is 17 haircuts each per day. The Cute Cut Salon is open an average of 24 days per month. Other financial information is as follows:

a. Number of haircuts. (Do not round intermediate calculations. Round up your answer to the next whole number.)

what's the break even sales haircuts?

b. Total sales dollars. (Round up "Break-even number of haircuts" to the next whole number. Do not round other intermediate calculations.)

What's the break even total sales dollars?

c. As a percentage of maximum capacity. (Round your percentage answer to the nearest whole percentage, (i.e., 0.123 should be considered as 12%).)

What is the break-even sales (% of capacity) ___ % ?

2. In February, 1,450 haircuts were given. Compute the net income for February. (Do not round intermediate calculations.)

what is the net income?

3. If Janice would like a $3,200 monthly profit, compute the number of haircuts that must be given per month to achieve this profit. (Do not round intermediate calculations. Round up your answer to the next whole number.)

what is the number of haircuts?

4. In March, 1,550 haircuts were given. Assuming demand is sufficient, would it be possible for stylists to give enough haircuts in April to achieve a monthly average profit equal to the target profit of $3,200? Consider only the two-month period of March and April.

Is it possible or not possible ?

PLEASE EXPLAIN YOURSELF

Janice owns the Cute Cut Salon. She employs 5 stylists and pays each a base salary of $1,800 per month. One of the stylists serves as the manager, receiving an extra $500 per month. In addition to the base salary, each stylist receives a commission of $5 per haircut. Each stylist can do as many as 25 haircuts a day, but the average is 17 haircuts each per day. The Cute Cut Salon is open an average of 24 days per month. Other financial information is as follows:

Explanation / Answer

Price per hair cut 16 Variable Costs: Stylist commission 5 Supplies 1.8 Utilities 0.75 Cleaning supplies 0.25 Total variable costs 7.8 Contribution 8.2 Fixed costs 5 Stylists Salary(1800*5) 9000 Manager- Extra 500 Advertising 500 Rent 920 Utilities 264 Magazines 50 Total Fixed costs 11234 1.a. Break-even no.of hair-cuts= Fixed costs to be covered/ Contribution/hair cut                                                          11234/8.2= 1370 hair cuts. Break-even sales dollars= 1370*16= $ 21920 b. Total sales dollars=5*17*24*16 = $ 32640 c. Break-even sales as a % age of Total sales dollars= 21920/32640 = 67.16% or 67% 2 Net income= Contribution- Fixed costs                            =(1450*8.2)-11234= $ 656 3. Target contribution= Fixed costs + Target profit                                               = 11234+ 3200 = 14434 Contribution /hair cut= $ 8.2 So, No.of haircuts= 14434/8.2= 1761 4. Hair cuts given in March - 1550 Net income =( 1550*8.2)- 11234= $ 1476 Total target profit for 2 months = 3200*2= 6400 Balance to be attained in April= 6400-1476= $ 4924 If $ 4924 is the Target profit, 11234+ 4924= 16158 ( is the Target Contribution) Which means 16158/8.2 = 1971      hair-cuts to be done. Maximum capacity is 5*17*24= 2040 hair cuts. Hence the above is possible.

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