Modern Beauty Parlour provides beauty treatment for women. Its average monthly variable costs per woman are as follows:

Modern Beauty charges \($250\) per woman on an average.
1. Calculate the breakeven point.
2. Modern Beauty’s target operating income is \($4\),000 per month. Compute the number of customers required to achieve the target operating income.
3. The parlor wants to move to another building for geographical advantage. Monthly rent for the new building is \($2\),350. With the objective of better visibility for the prospective customers, it plans to advertise on another local TV channel, incurring a monthly cost of \($420\). By how much should the parlor increase its average fees per customer to meet the target operating income of \($4\),000 per month, assuming the same number of customers as in requirement 2?

Transcribed Image Text:

Materials for beauty treatment Beautician's commission Other supplies (soaps, napkins, etc.) Total Monthly fixed costs consist of the following: Rent Utilities Advertisements on a local TV channel Salaries Miscellaneous Total $110 50 40 $200 $1,250 300 250 1,500 300 $3,600