B C D E Vin Diesel owns and operates the Fredonia Barber Shop. He pays himself a monthly salary of $1,750. He employs three other barbers who are paid a monthly salary of $1,250. All barbers, including Diesel, get paid a commission of $4 per haircut. Diesel charges $12 per haircut and plans to give 1,600 haircuts per month 6 7 Other costs are as follows: 8 Advertising $ 200 per month 9 Rent 1,100 per month fixeduper month 10 Magazines $ 100 per month variable per haircut 11 Barber supplies $ 0.50 per haircut 12 Utilities $ 0.30 per haircut utilites mixed 13 Utilities $ 200 per month 14 15 1) Complete the chart below to find contribution margin per unit and contribution margin ratio (x) 16 17 TOTAL UNIT u usluu 18 Sales $ $ X 19 Variable costs X 20 Contribution margin X 21 Fixed costs 22 Net Income 23 24 2) Calculate the following: 25 a) break-even in units: 26 b) break even in sales dollars: 27 28 29 3) Vin Is thinking about hiring a receptionist who will be paid $500 per month. 30 a) what is the new net income per month? b) what is the new break-even in units: c] what is the new break-even in dollars? 32 33 34 B D 34 35 4) Using the original information, calculate the following: 36 a) margin of safety: 37 b) margin of safety ratio (%) 38 5) Using the original information, calculate the required sales in units and dollars for a target Net Income of 39 $5,800 40 a) Units: b) Sales dollars: 42 436) What is the company's degree of operating leverage (use original information)? 44 45 46 47 ) Using the degree of operating leverage in part 6, estimate the impact on net income of a 7% increase in sales. 48 49 50 51 8) Complete a new income statement using the information in part 7. 52 53 TOTAL UNIT 54 Sales X IS 55 Variable costs 56 Contribution margin 57 Fixed costs 58 Net Income 59 60 Proof of change: 61 New net income 62 Original income