Janice owns the Cute Cut Salon. She employs 5 stylists and pays each a base salary of $1,700 per month. One of the stylists serves as the manager, receiving an extra $500 per month. In addition to the base salary, each stylist receives a commission of $5 per haircut. Each stylist can do as many as 20 haircuts a day, but the average is 17 haircuts each per day. The Cute Cut Salon is open an average of 24 days per month.
Other financial information is as follows:
| Advertising |
$ 700 per month |
| Rent |
$1,160 per month |
| Supplies |
$ 2.50 per haircut |
| Utilities |
$ 310 per month plus $0.75 per haircut |
| Magazines |
$ 50 per month |
| Cleaning supplies |
$ 0.25 per haircut |
| Price per haircut |
$25 |
Required:
1. Compute the monthly break-even point for the following:
a. Number of haircuts.
b. Total sales dollars.
c. As a percentage of maximum capacity.