The Peace Barber Shop employs four barbers. One barber, who also serves as the manager, is paid a salary of $1,800 per month. The other barbers are paid $1,300 per month. In addition, each barber is paid a commission of $4 per haircut. Other monthly costs are: store rent $800 plus 60 cents per haircut, depreciation on equipment $500, barber supplies 40 cents per haircut, utilities $300, and advertising $200. The price of a haircut is $11.
Instructions
Determine the variable cost per haircut and the total monthly fixed costs.
Compute the break-even point in i) units and ii) dollars.
Determine the net income, assuming 1,500 haircuts are given in a month.
