Stan Loy owns the Vista Barber Shop. He employs 5 barbers and pays each a base rate of $1000 per month. One of the barbers serves as a manager and receives an extra $500 per month. In addition to the base rate, each barber also receives a commission of $5.50 per haircut.
Other costs: Advertising $200 per month, Rent 900 per month, Barber supplies .30 per haircut, Utilities 175 per month plus .20 per haircut, Magazines 25 per month.
Stan currently charges $10 per haircut.
a) Determine the variable cost per haircut and the total monthly fixes costs
b) Compute the break even point in units and dollars
c) Prepara 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 on the vertical axis.
d) Determine net income, assuming 1,900 haircuts are given in a month.