Question
Ivanhoe Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base rate of $1,640 per month. One of the barbers
Ivanhoe Diesel owns the Fredonia Barber Shop. He employs 5 barbers and pays each a base rate of $1,640 per month. One of the barbers serves as the manager and receives an extra $530 per month. In addition to the base rate, each barber also receives a commission of $5.50 per haircut. Other costs are as follows.
| Advertising | $280 | per month | |
| Rent | $990 | per month | |
| Barber supplies | $0.45 | per haircut | |
| Utilities | $175 | per month plus $0.35 per haircut | |
| Magazines | $25 | per month |
Ivanhoe currently charges $11.30 per haircut.
A) Determine the variable costs per haircut and the total monthly fixed costs.
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Financial Theory and Corporate Policy
Authors: Thomas E. Copeland, J. Fred Weston, Kuldeep Shastri
4th edition
321127218, 978-0321179548, 321179544, 978-0321127211
