Nancy’s Beauty Salon does mainly haircuts for men and small children. Each haircut is a unique job, but takes about the same amount of time to complete. Nancy charges $25 per haircut regardless of whether someone is going bald or has a full head of hair. Clearly, she gets very few bald customers! Below are Nancy ’s costs for running her business.

REQUIRED:

a. Complete the above chart, noting which costs are fixed and which are variable.

b. Develop a cost formula for Nancy. Be careful here because you want the costs for one haircut, not 100, right?

c. Develop a breakeven analysis for Nancy’s Beauty Salon in number of customers.

d. Develop a breakeven analysis for Nancy in dollars of revenue.

e. Nancy wants to make $5,000 per month before- tax profit. How many haircuts does she need to do now?

Transcribed Image Text:

Nancy's Beauty Salon Cost for 100 Haircuts Cost for 200 Haircuts Cost for 300 Haircuts Change in Cost, Change in Cost, 100 to 200 200 to 300 Haircuts Variability (Variable or Fxed) Resource Haircuts Labor $1,000 $2,000 $3,000 Building $25,000 $25,000 $25,000 Beauty supplies $100 $200 $300 Cash register $500 $500 $500 S - Total Variable Cost for 0 Haircuts Cost Formula per Haircut Plus