John, now retired, owns the Campus Cutter Barber Shop. He employs five barbers and pays each a base salary of $1,500 per month. One of the barbers serves as the manager and receives an extra $500 per month. In addition to the base salary, each barber receives a commission of $6 per haircut. Each barber can do as many as 20 haircuts a day, but the average is 14 haircuts each day. The Campus Cutter Barber Shop is open an average of 24 days per month and charges $15 per haircut.

Other costs are incurred as follows:

Advertising	$500 per month
Rent	$1,000 per month
Supplies	$1.50 per haircut
Utilities	$300 per month, plus $0.50 per haircut
Magazines	$50 per month
Cleaning supplies	$0.25 per haircut

Instructions

a. Calculate the monthly break-even point for the following:

• 1.Number of haircuts
• 2.Total sales dollars
• 3.As a percentage of maximum capacity

b. In February, 1,500 haircuts were given. Calculate the operating income for February.

c. If John would like a $4,000 monthly profit, calculate the number of haircuts that must be given per month to achieve this profit.

d. In March, 1,600 haircuts were given. Assuming demand is sufficient, would it be possible to give enough haircuts in April to bring the total for the two months combined to the target profit of $4,000 for each month?