Stanley Clipper, now retired, owns the Campus Barber Shop. He employs 5 barbers and pays each a base rate of $500 a month. One of the barbers serves as manager and receives an extra $300 per month. In addition to the base rate, each barber also receives a commission of $3 per hair cut. A barber can do as many as 20 haircuts a day, but the average is 14 haircuts per day. The Campus Barber Shop is open 24 days a month. You can safely ignore income taxes.
- Other costs are incurred as follows:
- Advertising $200 per month
- Rent $400 per month
- Barber Supplies $.90 per haircut
- Utilities $175 per month plus $.35 per haircut
- Magazines $25 per month
- Cleaning Supplies $.15 per hair cut
- Stanley currently charges $8 per haircut.
(a) Compute the break even point in (1) number of haircuts, (2) total sales dollars, and (3) as a percentage of capacity.
(b) In March, 1,400 haircuts were given. Compute the operating profits for this month.
(c) Stanley wants a $2,160 operating profit in April. Compute the number of haircuts that must be given in order to acheive that goal.
(d) If 1,500 haircuts are given in April, compute the selling price that would have to be charged in order to have $2,160 in operating profits.