Tyne, now retired, owns the Downtown Beauty Shop. She employs five (5) stylists and pays each a base rate of $500 per month. One of the stylists serves as the manager and receives an extra $300 per month. In addition to the base rate, each stylist also receives a commission of $3 per haircut. A stylist can do as many as 20 haircuts a day. The Downtown Beauty 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 Beauty Supplies $ 0.90 per haircut Utilities $ 175 per month plus $0.35 per haircut Magazines $ 25 per month Cleaning Supplies $ 0.15 per haircut ________________________________________ Renee currently charges $8 per haircut. Required: (a) Compute the break-even point in (1) number of haircuts, (2) total sales dollars, and (3) as a percentage of capacity. (b) In July, 1,400 haircuts were given. Compute the operating profits for the month. (c) Renee wants a $2,160 operating profit in August. Compute the number of haircuts that must be given in order to achieve this goal. (d) If 1,500 haircuts are given in August, compute the selling price that would have to be charged in order to have $2,160 in operating profits.
Tyne, now retired, owns the Downtown Beauty Shop. She employs five (5) stylists and pays each a base rate of $500 per month. One of the stylists serves as the manager and receives an extra $300 per month. In addition to the base rate, each stylist also receives a commission of $3 per haircut. A stylist can do as many as 20 haircuts a day. The Downtown Beauty 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 Beauty Supplies $ 0.90 per haircut Utilities $ 175 per month plus $0.35 per haircut Magazines $ 25 per month Cleaning Supplies $ 0.15 per haircut ________________________________________ Renee currently charges $8 per haircut. Required: (a) Compute the break-even point in (1) number of haircuts, (2) total sales dollars, and (3) as a percentage of capacity. (b) In July, 1,400 haircuts were given. Compute the operating profits for the month. (c) Renee wants a $2,160 operating profit in August. Compute the number of haircuts that must be given in order to achieve this goal. (d) If 1,500 haircuts are given in August, compute the selling price that would have to be charged in order to have $2,160 in operating profits.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Tyne, now retired, owns the Downtown Beauty Shop. She employs five (5) stylists and pays each a base rate of $500 per month. One of the stylists serves as the manager and receives an extra $300 per month. In addition to the base rate, each stylist also receives a commission of $3 per haircut. A stylist can do as many as 20 haircuts a day. The Downtown Beauty 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
Beauty Supplies $ 0.90 per haircut
Utilities $ 175 per month plus $0.35 per haircut
Magazines $ 25 per month
Cleaning Supplies $ 0.15 per haircut
________________________________________
Renee currently charges $8 per haircut.
Required:
(a) Compute the break-even point in (1) number of haircuts, (2) total sales dollars, and (3) as a percentage of capacity.
(b) In July, 1,400 haircuts were given. Compute the operating profits for the month.
(c) Renee wants a $2,160 operating profit in August. Compute the number of haircuts that must be given in order to achieve this goal.
(d) If 1,500 haircuts are given in August, compute the selling price that would have to be charged in order to have $2,160 in operating profits.
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