Consider the following scenario:
Andre has asked you to evaluate his business, Andre’s Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40-hour week and a 50-week year, regardless of the number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on all clients is $0.40 per client. Assume that the only service performed is the giving of haircuts (including shampoo), the unit price of which is $12. Andre has asked you to find the following information.
- Find the contribution margin per haircut. Assume that the barbers’ compensation is a fixed cost. Show calculations to support your answer.
- Determine the annual break-even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer.
- What will be the operating income if 20,000 haircuts are performed? Show calculations to support your answer.
- Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)? Show calculations to support your answer.
The information should vbe placed in a Excel spread sheat.
Finally, would you recommend he change his compensation scheme and, if so, why? or why not? 1 Page Please all original information and use intext citation
Andre has asked you to evaluate his business, Andre’s Hair Styling. Andre has five barbers working for him.
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Please xxx xxx xxxxxxxxxxx xxx xxxxxxxxx
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| Andre has xxxxx xxx to evaluate his xxxxxxxxx Andre’x xxxx Styling. xxxxx has xxxx xxxxxxx xxxxxxx for him. xxxxxx is not xxx xx xxxxxx Each barber xx xxxx xxxxx per hour and xxxxx a 40-hour xxxx xxx x 50-week year, xxxxxxxxxx of xxx xxxxxx of haircuts. xxxx and xxxxx fixed expenses xxx $1,750 xxx month. Hair shampoo used on all clients is xxx xxx client. xxxxxx xxxx xxx xxxx service xxxxxxxxx is xxx xxxxxx of xxxxxxxx (including xxxxxxxxx xxx xxxx price xx xxxxx is xxxx Andre has xxxxx you xx find xxx xxxxxxxxx xxxxxxxxxxxx | |
| xxxx xxx xxxxxxxxxxxx margin xxx xxxxxxxx xxxxxx that xxx xxxxxxxx xxxxxxxxxxxx is x fixed xxxxx xxxx calculations xx xxxxxxx xxxx xxxxxxx | |
| Calculation xx xxxxxxxxxxxx xxxxxx per head: | |
| Hair xxx price | 12 |
| xxxx xxxxxxxx expenses: | |
| xxxxxxx expense | 0.4 |
| xxxxxxxxxxxx xxxxxx xxx head | xxxx |
| Determine xxx annual xxxxxxxxxx xxxxxx xx number of xxxxxxxxx Support your answer with an appropriate explanation. xxxx xxxxxxxxxxxx to xxxxxxx your answer. | |
| Break |
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Andre has xxxxx xxx xx xxxxxxxx xxx business, xxxxx’x Hair Styling. Andre has five barbers xxxxxxx for xxxx xxxxxx is not one of them.) xxxx barber xx paid $9.90 xxx hour xxx xxxxx a 40-hour week and x 50-week year, xxxxxxxxxx xx the number of xxxxxxxxx xxxx and other fixed xxxxxxxx are xxxxxx xxx xxxxxx xxxx shampoo used xx all clients is xxx per xxxxxxx Assume that xxx xxxx xxxxxxx xxxxxxxxx xx the xxxxxx xx haircuts xxxxxxxxxx xxxxxxxxx xxx xxxx price xx which xx $12. xxxxx has asked you to xxxx the xxxxxxxxx xxxxxxxxxxxx ��Find the xxxxxxxxxxxx xxxxxx per xxxxxxxx xxxxxx xxxx xxx xxxxxxxx xxxxxxxxxxxx is a fixed xxxxx Show calculations xx xxxxxxx xxxx xxxxxxx �Contribution xxxxxx per head x xxxx cut price x xxxxxxx expense
= xx – .40 = xxxxxxx
xxxxxxxxx xxx xxxxxx xxxxxxxxxx point, xx number of haircuts. xxxxxxx your answer with xx appropriate xxxxxxxxxxxx Show xxxxxxxxxxxx xx xxxxxxx xxxx xxxxxxx �Break xxxx point is the point xx xxxxx xxx xxx xxxxx costs are xxxxxxxxx
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