Stan Loy owns the Vista Barber Shop. He employs 5 barbers and pays each a base rate of $1,070 per month. One of the barbers serves as the manager and receives an extra $502 per month. In addition to the base rate, each barber also receives a commission of $5.60 per haircut.
Other costs are as follows.
Advertising $178 per month
Rent $921 per month
Barber supplies $0.30 per haircut
Utilities $175 per month plus $0.40 per haircut
Magazines $21 per month
Matt currently charges $10.50 per haircut.
a. Compute the break-even point in units and dollars.
b. Determine net income, assuming 2,000 haircuts are given in a month.