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# Breakeven point and net income

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Matt Reiss owns the Fredonia Barber Shop. He employs five barbers and pays each a base rate of \$1,000 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 \$5.50 per haircut.

Other costs are as follows.

Rent \$900 per month
Barber supplies \$0.30 per haircut
Utilities \$175 per month plus \$0.20 per haircut
Magazines \$25 per month

Matt currently charges \$10 per haircut.
Hint:
Determine variable and fixed costs, compute break-even point, prepare a CVP graph, and determine net income.

Instructions
(a) Determine the variable cost per haircut and the total monthly fixed costs.

(b) Compute the break-even point in units and dollars.

(d) Determine net income, assuming 1,900 haircuts are given in a month.

https://brainmass.com/economics/break-even-analysis/breakeven-point-and-net-income-279652

#### Solution Preview

a. The variable costs are
Commission \$5.50 per haircut
Barber supplies \$0.30 per haircut
Utilities \$0.20 per haircut
Total variable cost = \$6.00per haircut
The fixed monthly ...

#### Solution Summary

The solution explains how to calculate the breakeven units and the net income given the units sold

\$2.19