Stan Loy owns the Vista Barber Shop. He employs 5 barbers and pays each a base rate

Stan Loy owns the Vista Barber Shop. He employs 5 barbers and pays each a base rate of $1,000 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 $5.50 per haircut.

Other costs are as follows.

Advertising $200 per month
Rent $900 per month
Barber supplies $0.30 per haircut
Utilities $175 per month plus $0.20 per haircut
Magazines $25 per month

Stan currently charges $10.00 per haircut.

Determine the variable cost per haircut and the total monthly fixed costs. (Round per unit costs to 2 decimal places e.g.$2.75)

Compute the break-even point in units and dollars. (Round answers to 0 decimal places.)

Determine net income, assuming 1,900 haircuts are given in a month.

 

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