Problem: Andy has five barbers working for him. Each Barber is paid $9.90/hr & works 40/hr week & a 50/wk year regardless of # of haircuts. Rent & other fixed expenses are $1750 per month. Hair shampoo used on all clients costs .40 per client. Assuming they are on ly doing haircuts the unit price is $12.
1 Find contribution margin per haircut. Assume the barbers' compensation is a fixed cost. Show calculation please.
2 Determine break even point (annual) in number of haircuts. Show calculation and statement.
3 What will be the operating income if 20,000 haircuts are performed? show calculations.
4 - If Barber revises compensation & the barbers will receive $4 per hour plus $6 for each haircut.
What is the new contribution margin per haircut? annual break even point in number of haircuts?