A. You own a hair salon providing a wash, cut, and style for $15. After a __ analysis of your expenses, you determine your monthly cost function is $42,500 + 3x. 1. What kind of costs makes up the $42,500? (Circle one) Fixed, Mixed, Variable 2. What are some of the cost that might make up the $42,500? 3. What kind of costs makes up the $3? (Circle one) Fixed, Mixed, Variable 4. What are some of the costs that might make up the $3? 5. Is it likely your employees are salaried or paid by the haircut? Why? 6. How much are your costs expected to be if you have 5000 customers next month? 7. What is your break-even number of customers for a year? 8. You are considering adding permanents and hair coloring to your service mix. May you use this same cost function to make estimates about future expenses? Why or why not? B. You sell your business, move to a new city, and start work in a new salon. This salon has a different mix of services and a different cost structure. You provide three services - haircuts (charge $22), permanents (charge $34), and hair coloring (charge $120). You pay the salon $18,700 per year for rent and then variable costs per service - haircuts $9, permanents $20, and hair coloring $70. Generally, you do 12 haircuts, 6 permanents, and 2 hair colorings in a day. 9. Based on the above sales mix, how many of each service do you have to provide to break-even? 10. After how many working days will you break even? 11. After 250 working days (5days/week & 50 work week/year), what will be your profit? C) You have the itch to own your own salon again. You have two options and you can only choo The first option is to purchase the salon where vou are currently working for $750,000; you en make an operating income of $110,000 per year for 15 years. Another option is to open an entirely new salon for $500,000 and you expect to be able to make $75,000 for 15 years, and then sell the business for $150,000. You have a required rate of return of 10%. 12. What would be the proper method to use to assess these options and why! 13. Calculate the NPV and IRR for both options. If you are a "tables person," you may skip the IRR for option 2. If you are a "calculator person," indicate which investment is best. D) You decide to develop a line of hair care products. 14. If your product's target price is $20 and your desired profit is 15%, what is the target cost? E) You start by selling your products to your own clients and this business grows quickly. Soon, you are selling your products to salons throughout the country. Within two y is to salons throughout the country. Within two years, you sell the brand and your secret recipes to Proctor & Gamble for $20 million. With the money you get, you open a chain of twelve salons in your city, eam en a chain of twelve salons in your city, each having an investment of 200,000 and $2,000,000. Each salon has a manager who has a lot of independence with mg, setting shop hours, pricing, advertising, etc. You retain control over only investing excess cash, opening new stores, hiring managers, and choosing the lines of product 15. What kind of responsibility centers are your individual salons? 16. Would you consider your chain centralized or decentralized? Why? 17. You decide to change your annual bonus system and base it on a balanced Scorecard. Illustrate one measurement you could have for the customer perspective, internal business process perspective, or the learning and growth perspective