Lakespring Retirement Village is home to senior citizens who are fairly independent but need assistance with basic health care and occasional meals. Jill Thompson, a licensed beautician, works on salary 18 hours a week. Funds at the retirement village have been getting tight due to an increase in the number of MEdicaid and other low-income residents. Carl Jones, Lakespring's administrator, thold Thompson that the hair salon might have to be closed. Jones is looking for a way to save the hair salon and has provided the following information: Jill is currently doing an average weekly business of 19 haircuts, 7 permanents, and 6 brief visits, which take half an hour, an hour, and 15 minutes, respectively. The hair salon is currently allocated rent of $270 per month and other upkeep expenses of $60 a month. Thompson is paid $14 an hour.

	Haircuts	Permanents	Brieft Visits
Charge per resident	$15	$25	$10
Variable cost per service performed	$2	$5	$4.50
Variable water expense	$0.25	$0.35	$0.35
Laundry expenses	$0.15	$0.35	$0.40

A) Prepare a monthly income statement and determine the total contribution margin and total product margin for each service line. Determine net income for the service taken as a whole. B) Should Jones close the hair salon? Why or why not? C) Should Jones try to persuade Thompson to drop any service she now offers?