Q2: Problem 11- Vin Diesel owns the Pina Colade Barber Shop. He employs6barbers

Question

Q2:
Problem 11- Vin Diesel owns the Pina Colade Barber Shop. He employs6barbers and pays each a base rate of $1,600 per month. One of the barbers serves as the manager and receives an extra $520 per month Other costs are as follows $210 per month $970 per month $0.30 per haircut $180 per month plus $0.20 per haircut Barber supplies $30 per month X Your answer is incorrect. Try again Determine the variable costs per hairout and the total monthly fixed costs (Round variable costs to 2 decimal places, e-g. 2.25) Total variable cost per hairout

Explanation / Answer

Req 1: Total Variable cost: Commission to barber: 4.5 Barber Supplies 0.3 Utilities 0.2 Total Variable cost: 5 Total Fixed cost: Advertising 210 Rent 970 Utilities 180 Magazines 30 Barbers salaries (1600*6+520) 10120 Total Fixed cost: 11510 Req 2: Selling price: 10 Less: variable cost: 5 Contribution per unit 5 CM ratio: Contribution/ Selling price *100 $ 5 /10 *100 = 50% Break even in units: Fixed cost /Contribution per unit 11,510 / 5 = 2302 units Break even in $: Fixed cost / CM ratio $ 11,510 / 50% = 23,020 Req 3: Net income: Contribution of 2380 haircuts 11900 Less: Fixed cost 11510 Net income: 390

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