Assume Strands Salon, a San Diego hair salon, provides haircuts for $60. Annual fixed costs are...

Transcribed Image Text:

Assume Strands Salon, a San Diego hair salon, provides haircuts for $60. Annual fixed costs are $672,000 and the company estimates $15.30 in variable costs per haircut. REQUIRED a. Prepare a contribution income statement for the following year assuming the company forecasts that it will provide 25,200 haircuts. Contribution margin Fixed costs Gross margin S Profit Sales Variable costs 0 S margin ratio. Note: Enter the percent rounded to one digit after the decimal; for example, enter 8.4 for 8.44%, or 8.5 for 8.45%. c. How does your answer to part b change if fixed costs are expected to increase by 10% and variable cost per unit are expected to increase by $2.34 per haircut? Note: Enter the percent rounded to one digit after the decimal; for example, enter 8.4 for 8.44%, or 8.5 for 8.45%. Contribution margin ratio: 0 Check % Assume Strands Salon, a San Diego hair salon, provides haircuts for $60. Annual fixed costs are $672,000 and the company estimates $15.30 in variable costs per haircut. REQUIRED a. Prepare a contribution income statement for the following year assuming the company forecasts that it will provide 25,200 haircuts. Contribution margin Fixed costs Gross margin S Profit Sales Variable costs 0 S margin ratio. Note: Enter the percent rounded to one digit after the decimal; for example, enter 8.4 for 8.44%, or 8.5 for 8.45%. c. How does your answer to part b change if fixed costs are expected to increase by 10% and variable cost per unit are expected to increase by $2.34 per haircut? Note: Enter the percent rounded to one digit after the decimal; for example, enter 8.4 for 8.44%, or 8.5 for 8.45%. Contribution margin ratio: 0 Check %

Answer rating: 100% (QA)

a To prepare a contribution income statement we need to calculate the sales variable costs contribut... View the full answer