# Break-even Analysis - The Barber Shop

The peace barber shop employs four barbers. One barber, who also serves as the manager, is paid a salary of $1,800 per month. The other barbers are paid 1,300 per month. In addition, each barber is paid a commission of $4 per haircut. Other monthly costs are: store rent $800 plus 60 cents per haircut, depreciation on equipment $500, barber supplies 40 cents per haircut, utlilities $300, and advertising $ 200. the price of a haircut is $11.

Instructions

(1)how can I determine the variable cost per haircut and the total monthly fixed cost

(2) how do I compute the break even point in units and dollars

(3)How do I determine the net income, assuming 1500 are given in a month?

https://brainmass.com/economics/break-even-analysis/break-even-analysis-barber-shop-183428

#### Solution Preview

(1) The variable cost per haircut = 4 + 0.60 + 0.40 = $5

The total fixed cost per month = 1800 + 3(1300) + 800 + 500 + 300 + 200 = $7500

(2) Let x be the ...

#### Solution Summary

Detailed solutions to all the parts of the question.