Problem - Matt Reiss owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,100 per month. One of the barbers serves as the manager and receives an extra $520 per month. In addition to the base rate, each barber also receives a commission of $5.70 per haircut.
Other costs are as follows.
Advertising $290 per month
Rent $970 per month
Barber supplies $0.30 per haircut
Utilities $180 per month plus $0.30 per haircut
Magazines $30 per month
Matt currently charges $11.50 per haircut.
Determine the variable cost per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.)
Compute the break-even point in units and dollars. (Round answers to 0 decimal places, ie. 1,275.)
Determine net income, assuming 2,330 haircuts are given in a month.