Purchase Solution

Fine contribution margins: barbershop (calculating break-even point and operating income)

Not what you're looking for?

Ask Custom Question

A barber has asked me evaluate his business. He has 5 barbers working for him (he doesn't cut hair). Each barber is paid $9.90/hr and works 40-hrs week and a 50-week year, REGARDLESS of the number of haircuts. There is rent and fixed expenses ($1,750) per month. Assume the only service performed is haircuts, the unit price is $12. The barber asked me to find the following information.
Find the contribution margin per haircut. Assume that the barber's compensation is a fixed cost. Determine the annual break-even point, in number of haircuts. What will be the operating income if 20,000 haircuts are performed?

Purchase this Solution

Solution Summary

You will find the answer to this puzzling question inside...

Solution Preview

1. contribution margin per haircut
This case is quite special, because there's no variable cost involved. We have to make VC=0, then from the formula:
CM = Unit Price - Variable cost ...

Purchase this Solution

Free BrainMass Quizzes

This quiz will test your understanding of the SWOT analysis, including terms, concepts, uses, advantages, and process.

Team Development Strategies

This quiz will assess your knowledge of team-building processes, learning styles, and leadership methods. Team development is essential to creating and maintaining high performing teams.

Understanding the Accounting Equation

These 10 questions help a new student of accounting to understand the basic premise of accounting and how it is applied to the business world.

Business Ethics Awareness Strategy

This quiz is designed to assess your current ability for determining the characteristics of ethical behavior. It is essential that leaders, managers, and employees are able to distinguish between positive and negative ethical behavior. The quicker you assess a person's ethical tendency, the awareness empowers you to develop a strategy on how to interact with them.

Cost Concepts: Analyzing Costs in Managerial Accounting

This quiz gives students the opportunity to assess their knowledge of cost concepts used in managerial accounting such as opportunity costs, marginal costs, relevant costs and the benefits and relationships that derive from them.