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Mary Contrary owns the Mary's Massage in Minutes at the local shopping centre. She employs 9.00 massage therapists and pays each a base rate of

Mary Contrary owns the Mary's Massage in Minutes at the local shopping centre. She employs 9.00 massage therapists and pays each a base rate of $1,100 per month. One of the massage therapists serves as the manager and receives an extra $900 per month. In addition to the base rate, each massage therapists also receives a commission of $30 per client.

Advertising 450 Per month
Rent 1000 Per month + $2.50 per massage
Massage Supplies 28 Per massage
Power 410 Per month
Dry Cleaning 465 Per month
Depreciation 475 Per month

May currently charges 65 per massage.

Required:

  1. Determine the variable cost per massage and total monthly fixed costs [2 marks]
  2. Calculate the break-even point in units and dollars
  3. Determine profit if massages are given in a month
  4. Calculate the required number of massages if profit per month is to be achieved.

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