Question
Dorothy's Cutting Station offers a new concept in haircuts; low cost and very quick. Set in a local mall,Dorothy's offers 15-minute haircuts for harried shoppers
Dorothy's Cutting Station offers a new concept in haircuts; low cost and very quick. Set in a local mall,Dorothy's offers 15-minute haircuts for harried shoppers who do not have time for lengthy appointments. To ensure that the clients are in and out quickly, she schedules her 5 employees based on expected client traffic. Each of the employees is paid $1230per month, with part of their pay coming from client tips.Dorothypays rent and overhead costs of $2400per month on the facility. Because of the quick nature of the service,Dorothydoesn't have time to clean combs in between clients, so she uses a new comb for each customer, at a cost of $0.65each. She also provides shampoo and conditioner for each client at a cost of $1.05per client. The average price for a haircut is $14.Dorothypays herself $5400per month. What isDorothy's contribution margin per haircut?
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