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    Calculating margin per haircut: barbershop

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    A barber asked me to evaluate his business. He has five barbers working for him. Each barber is paid $4 per hour plus $6 for each haircut and works 40hrs week and a 50-week year. Rent and other fixed expenses ($1,750) per month. What is the contribution margin per haircut? What is the annual break-even point (in number of haircuts)?

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    Solution Preview

    Each barber works 50x40 = 2000 hrs per year
    Annual wage of each barber = 2000 x 4
    = $8000 (Fixed ...

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