Question
CH 18 Practice Problem # 1 Work through the following problem as best you can on your own. Then watch the accompanying video. Then
CH 18 Practice Problem # 1 Work through the following problem as best you can on your own. Then watch the accompanying video. Then proceed to the accompanying Quiz. Chattanooga Barber Shop's owner Mike is working on his accounting and budgeting for the year. He employs four 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 $4.00 per haircut. Other costs are as follows. Advertising $200 per month Rent $1,400 per month Barber supplies $0.30 per haircut Utilities $175 per month plus $0.20 per haircut Magazines $25 per month Mike currently charges $15 per haircut. Determine the following: 1. Variable costs per haircut 2. Total monthly fixed costs 3. Break-even point in units and break-even point in dollars 4. Net income, assuming 1,200 haircuts are given in a month 5. Margin of Safety in dollars if the 1,200 haircut revenues is the actual or expected revenues 6. Margin of Safety Ratio if the 1,200 haircut revenues is the actual or expected revenues 7. Required sales units and revenues in dollars if a target net income of $7,500 is desired
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