11.07.2022 - 04:45

# Vin Diesel owns the Fredonia Barber Shop. He employs four barbers and pays each a base rate of $1,250 per month. One of the barbers serves as the manager and receives an extra$500 per month. In addit

Question:

Vin Diesel owns the Fredonia Barber Shop.

He employs four barbers and pays each a base rate of $1,250 per month. One of the barbers serves as the manager and receives an extra$500 per month.

In addition to the base rate, each barber also receives a commission of $4.50 per haircut. Other costs are as follows:  Advertising$200 per month Rent $1,100 per month Barber supplies$0.30 per haircut Utilities $175 per month plus$0.20 per haircut Magazines $25 per month Vin currently charges$10 per haircut.

Required:

(a) Determine the variable costs per haircut and the total monthly fixed costs.

(b) Compute the break-even point in units and dollars.

(c) Determine net income, assuming 1,600 haircuts are given in a month.

• (a) The variable costs per haircut include the commission paid to each barber ($4.50) and the cost of barber supplies ($0.30), for a total of $4.80. The total monthly fixed costs include advertising ($200), rent ($1,100), utilities ($175 plus $0.20 per haircut, which equals$325), and magazines ($25), for a total of$1,650. (b) To compute the break-even point in units, we need to find the contribution margin per unit, which is the selling price ($10) minus the variable costs per unit ($4.80), which equals $5.20. To find the break-even point in units, we divide the total monthly fixed costs ($1,650) by the contribution margin per unit ($5.20), which equals \approx imately 317 units. To compute the break-even point in dollars, we multiply the break-even point in units (317) by the selling price ($10), which equals $3,170. (c) To determine net income, we first need to find the total revenue from 1,600 haircuts, which is 1,600 multiplied by the selling price ($10), which equals $16,000. The variable costs for 1,600 haircuts is 1,600 multiplied by the variable cost per unit ($4.80), which equals $7,680. The total fixed costs remain the same at$1,650. Therefore, the total costs for 1,600 haircuts is $9,330 ($7,680 in variable costs plus $1,650 in fixed costs). To find net income, we subtract the total costs ($9,330) from the total revenue ($16,000), which equals$6,670. Therefore, the estimated net income for the month is $6,670. Do you know the answer? Not sure about the answer? Find the right answer to the question Vin Diesel owns the Fredonia Barber Shop. He employs four barbers and pays each a base rate of$1,250 per month. One of the barbers serves as the manager and receives an extra \$500 per month. In addit by subject Business, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.