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Seneca College *

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Accounting

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Nov 24, 2024

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10/30/23, 8:14 PM Chapter 4 Post-Class Homework https://www.ameengage.com/mod/quiz/review.php?attempt=4637934&cmid=1260603&page=5 1/2 Dashboard / My courses / [Seneca 09/2023] HTM440NHB - Nardi / CHAPTER 4 - Cost-Volume-Profit Analysis / Chapter 4 Post-Class Homework Question 6 Partially correct Mark 4.00 out of 6.00 Take me to the text The Crazy Hair Salon provides special-occasion haircuts and generates average revenue of $66 per customer. The salon’s fixed costs are $50,000 per year, which include rent, utilities and magazine subscriptions. Its variable costs are $16.50 per customer. Target operating profit for the year is $98,000. Do not enter dollar signs or commas in the input boxes. a) Calculate the revenues needed to obtain the target operating profit. Round the Contribution Margin ratio to 2 decimal places. Round all other answers to the nearest whole number. CM ratio: 75 % Required CM: $ 148000 Revenue: $ 197333 b) How many haircuts have to be provided to earn an operating profit of $71,000? To break-even? Round up to the nearest whole unit. BEP: 1010 Haircuts to yield $71,000: c) Calculate the operating profit if 3,800 haircuts are provided. Round to the nearest whole number. Operating Profit: $ 138100 Explanation a) CM ratio: = ($66 - $16.50) ÷ $66 = 75.00% Required CM: = $98,000 + $50,000 = $148,000 Revenue: = $148,000 ÷ 75.00% = $197,333 b) BEP: = $50,000 ÷ ($66 - $16.50) = 1,011 Haircuts to yield $71,000: = ($50,000 + $71,000) ÷ ($66 - $16.50) = 2,445 c) Operating Profit: = 3,800 x ($66 - $16.50) - $50,000 = $138,100 Partially correct Marks for this submission: 4.00/6.00.
10/30/23, 8:14 PM Chapter 4 Post-Class Homework https://www.ameengage.com/mod/quiz/review.php?attempt=4637934&cmid=1260603&page=5 2/2
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