Question: To solve this problem, please use the following information and formula: p = Price, VC = Variable Cost, FC = Fixed Cost, Q = Quantity,

To solve this problem, please use the following information and formula:

p = Price, VC = Variable Cost, FC = Fixed Cost, Q = Quantity, P = Profit

( p x Q) - (Total VC + Total FC) = P

Note: Total VC = Q x VC per unit and Fixed cost include both indirect (overhead) and direct cost

SETTING PRICES ON INDIVIDUAL PRODUCTS or SERVICES NEW SERVICE: Hair Salon PROJECTED DATA: VARIABLE COST PER VISIT $17 ANNUAL DIRECT FIXED COST $138,000 ANNUAL OVERHEAD ALLOCATION $41,000 NUMBER OF VISITS 5,950 WHAT PRICE MUST BE SET TO ACHIEVE BREAKEVEN POINT? WHAT PRICE MUST BE SET TO ACHIEVE $30,000 PROFIT?

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