Question

Vin Diesel owns the Marigold Barber Shop. He employs 7 barbers and pays each a base rate of $1,650 per month. One of the barbers serves as the manager and receives an extra $500 per month. In addition to the base rate, each barber also receives a commission of $4.50 per haircut. Other costs are as follows. Advertising $260 per month Rent $800 per month Barber supplies $0.30 per haircut Utilities $185 per month plus $0.20 per haircut Magazines $20 per month Vin currently charges $10.00 per haircut.
Thank you!!

Answer 1

Please Total fixed cost = ($1,650 X 7) + $500 + $260 + $800 + $185 + $20 = $13,315

Total Variable cost = $4.50 + $0.30 + $0.20 = $5

Breakeven point = $13,315 / ($10 - $5) = 2,663 haircuts

Breakeven point in dollars = [$13,315 / ($10 - $5)] X $10 = $26,630

Income for 3,020 haircuts = [3,020 X ($10 - $5)] - $13,315 = $1,785