Question

Sandhill Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,650 per month. One of the barbers serves as the manager and receives an extra $500 per month. In addition to the base rate, each barber also receives a commission of $5.50 per haircut. Other costs are as follows.
Advertising $260 per month
Rent $800 per month
Barber supplies $0.30 per haircut
Utilities $185 per month plus $0.20 per haircut
Magazines $20 per month
Determine the variable costs 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 $

Answer 1

Answer:

the variable costs per haircut and the total monthly fixed costs is $6 per haircut and $13,315 respectively

Explanation:

The computation is given below:

The variable cost per haircut should be

= $5.50 + $0.20 + $0.30

= $6 per haircut

And, the fixed cost should be

= 7 × $1,650 + $500 + $260 + $800 + $185  + $20

= $13,315

So, the variable costs per haircut and the total monthly fixed costs is $6 per haircut and $13,315 respectively