Q3: CVP Analysis [7.5 Marks]

The following data has been collected for the August operations of Luna, a local beauty salon:

August

Number of appointments 1900

Total Hair dresser salaries $18000

Total Manicurist salaries $ 16000

Supplies $950

Utilities $ 400

Rent $1000

Miscellaneous $3580

Required:

1.What is the cost function for Luna beauty Salon, use the table below to classify the cost outlined as either fixed or variable and then provide the total cost (TC) function in algebraic form? (5 marks)

Cost

Fixed

Variable

2.If the average fee per appointment is $25, estimate the number of appointments that would be required in August to break even. Show all workings. [2.5 marks]