9. Mohammed AI Harthi owns the Barber Shop. He employs five barbers and pays each a base rate of $2,000 per month. One of the barbers serves as the manager and receives an extra $1,000 per month. In addition to the base rate, each barber also receives a commission of $11.00 per haircut. Other costs are as follows. Advertising $400 per month $1,800 per month $0.60 per haircut $50 per month Rent Barber supplies Magazines Utilities $350 per month plus $0.40 per haircut Mohammed currently charges $20 per haircut. Instructions (a) Determine the variable cost per haircut and the total monthly fixed costs. (b) Compute the break-even point in units and dollars. (c) Determine net income, assuming 3,800 haircuts are given in a month. (d) Determine the margin of safety with 3,800 haircuts
9. Mohammed AI Harthi owns the Barber Shop. He employs five barbers and pays each a base rate of $2,000 per month. One of the barbers serves as the manager and receives an extra $1,000 per month. In addition to the base rate, each barber also receives a commission of $11.00 per haircut. Other costs are as follows. Advertising $400 per month $1,800 per month $0.60 per haircut $50 per month Rent Barber supplies Magazines Utilities $350 per month plus $0.40 per haircut Mohammed currently charges $20 per haircut. Instructions (a) Determine the variable cost per haircut and the total monthly fixed costs. (b) Compute the break-even point in units and dollars. (c) Determine net income, assuming 3,800 haircuts are given in a month. (d) Determine the margin of safety with 3,800 haircuts
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:9. Mohammed Al Harthi owns the Barber Shop. He employs five barbers and pays each a base
rate of $2,000 per month. One of the barbers serves as the manager and receives an extra
$1,000 per month. In addition to the base rate, each barber also receives a commission of
$11.00 per haircut.
Other costs are as follows.
$400 per month
$1,800 per month
$0.60 per haircut
$50 per month
Advertising
Rent
Barber supplies
Magazines
Utilities $350 per month plus $0.40 per haircut
Mohammed currently charges $20 per haircut.
Instructions
(a) Determine the variable cost per haircut and the total monthly fixed costs.
(b) Compute the break-even point in units and dollars.
(c) Determine net income, assuming 3,800 haircuts are given in a month.
(d) Determine the margin of safety with 3,800 haircuts
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