Question - Telly Savalas owns the Bonita 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 $550 per month. In addition to the base rate, each barber also receives a commission of $5.50 per haircut.
Other costs are as follows.
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Advertising
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$200 per month
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Rent
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$980 per month
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Barber supplies
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$0.40 per haircut
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Utilities
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$180 per month plus $0.30 per haircut
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Magazines
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$25 per month
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Telly currently charges $11.40 per haircut.
Determine the variable cost per haircut and the total monthly fixed costs.
Compute the break-even point in units and dollars.
Determine net income, assuming 2,420 haircuts are given in a month.