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2-33 Basic Relationships, Restaurant (W. Crum, adapted.) Nicole Azarski owns and operates a restaurant. Her fixed costs are $10,500 per month. Luncheons and dinners are served. The average total bill (excluding tax and tip) is $9 per customer. Azarski's present variable costs average $4.80 per meal 1. How many meals must be served to attain a profit before taxes of $4,200 per month? 2. What is the break-even point in number of meals served per month? 3. Azarski's rent and other fixed costs rise to a total of $14,700 per month. Assume that variable costs also rise to $5.75 per meal. If Azarski increases her average price to $11, how many meals must she now serve to make $4,200 profit per month? 4. Azarski's accountant tells her she may lose 10% of her customers if she increases her prices. If this should happen, what would be Azarski's profit per month? Assume that the restaurant had been serving 3,500 customers per month. 5. To help offset the anticipated 10% loss of customers, Azarski hires a pianist to per- form for 4 hours each night for $1,000 per month. Assume that this would increase the total monthly meals from 3,150 to 3,450. Would Azarski's total profit change? By how much? 2-34 Cost-Volume-Profit Analysis, Barbering Michael's Hair Styling in Singapore has five barbers. (Michael is not one of them.) Each barber is paid $8.90 per hour and works a 40-hour week and a 50-week year. Rent and other fixed expenses are $1,750 per month. Assume that the only service performed is the giving of haircuts, the unit price of which is $11. 1. Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost 2. Determine the annual break-even point, in number of I Would Azarski's total profit change? 3. By how much? Analysis, Barbering 2-34 Cost-Volume-Profit Michael's Hair Styling in Singapore has five barbers. (Michael is not one of them.) Each barber is paid $8.90 per hour and works a 40-hour week and a 50-week year. Rent and other fixed expenses are $1,750 per month. Assume that the only service performed is the giving of haircuts, the unit price of which is $11. 1. Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost. 2. Determine the annual break-even point, in number of haircuts. 3. What will be the operating income if 20,000 haircuts are sold? 4. Suppose Michael revises the compensation method. The barbers will receive $4 per hour plus $5 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)? 5. Ignore requirements 3 and 4 and assume that the barbers cease to be paid by the hour but receive $6 for each haircut. What is the new contribution margin per hair- cut? The annual break-even point (in number of haircuts)? 6. Refer to requirement 5. What would be the operating income if 20.000 haircuts are sold? Compare your answer with the answer in requirement 3. 7. Refer to requirement 5. If 20,000 haircuts are sold, at what rate of commission would Michael earn the same operating income as he earned in requirement 3