(a) $10,940 Open Show Work Show Solution Show Answer Link to Text Link to Text (
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(a)
$10,940
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(b)
Telly Savalas owns the Bonita Barber Shop. He employs 6 barbers and pays each a base rate of $ 1,500 per month. One of the barbers serves as the manager and receives an extra $ 510 per month. In addition to the base rate, each barber also receives a commission of $ 5.90 per haircut.Other costs are as follows.
Advertising $ 270 per month Rent $ 960 per month Barber supplies $ 0.40 per haircut Utilities $ 180 per month plus $ 0.40 per haircut Magazines $ 20 per month
Telly currently charges $ 11.90 per haircut.
Explanation / Answer
Bonita Barber Shop Details Amt $ Variable cost per Haircut Barber Commission 5.90 Barber Supplies 0.40 Utilities 0.40 Total Variable cost/Haircut 6.70 Revenue per hair Cut 11.90 Less Variable cost /haircut (6.70) Contribution Margin per Haircut 5.20 CM Ratio =5.2/11.9= 43.70% Total Fixed cost per month Barber Base salary 9,000 Manager salary 510 Advertising 270 Rent 960 Utilities 180 Magazines 20 Total fixed cost Per Month 10,940 Contribution Margin per Haircut 5.20 BEP no of Haircuts per month=10940/5.2= 2,104 BEP $ Sales =10940/43.7%= 25,036
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