The Sasoon Barber Shop employs four barbers. One barber, who also serves as the manager, is paid

Question:

The Sasoon Barber Shop employs four barbers. One barber, who also serves as the manager, is paid a salary of $3,000 per month. The other barbers are paid $1,500 per month. In addition, each barber is paid a commission of $3 per haircut. Other monthly costs are store rent $700 plus 60 cents per haircut, depreciation on equipment $400, barber supplies 40 cents per haircut, utilities $300, and advertising $100. The price of a haircut is $10.


Instructions

(a) Determine the variable costs per haircut and the total monthly fixed costs.

(b) Compute the break-even point in units and dollars.

(c) Prepare a CVP graph, assuming a maximum of 1,800 haircuts in a month. Use increments of 300 haircuts on the horizontal axis and $3,000 increments on the vertical axis.

(d) Determine the net income, assuming 1,800 haircuts are given in a month.


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Related Book For  book-img-for-question

Accounting Principles

ISBN: 9781118566671

11th Edition

Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso

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