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Susan's Cutting Station offers a new concept in haircuts; low cost and very quick. Set in a local mall, Susan's offers 15-minute haircuts for harried
Susan's Cutting Station offers a new concept in haircuts; low cost and very quick. Set in a local mall, Susan's offers 15-minute haircuts for harried shoppers who do not have time for lengthy appointments. To ensure that the clients are in and out quickly, she schedules her 5 employees based on expected client traffic. Each of the employees is paid $1270 per month, with part of their pay coming from client tips. Susan pays rent and overhead costs of $2300 per month on the facility. Because of the quick nature of the service. Susan doesn't have time to clean combs in between clients, so she uses a new comb for each customer, at a cost of $0.65 each. She also provides shampoo and conditioner for each client at a cost of $1.05 per client. The average price for a haircut is $10. Susan pays herself $5700 per month. What is Susan's contribution margin ratio? O 78.2% O 83.0% 17.0% O 6.0%
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