Question

Vin Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,560 per month. One of the barbers serves as the manager and receives an extra $510 per month. In addition to the base rate, each barber also receives a commission of $5.89 per haircut. Other costs are as follows. Advertising $250 per month Rent $990 per month Barber supplies $0.47 per haircut Utilities $170 per month plus $0.20 per haircut Magazines $20 per month Vin currently charges $11.56 per haircut. Determine the variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e.g. 2.25.) Total variable cost per haircut $ Total fixed $

Answer 1

The variable cost per unit is $6.56

The total monthly fixed cost is $12,860

Step-by-step explanation:

The computation of variable cost per hair cut is equals to

= Barber supplies per haircut + utilities per haircut + commission per hair cut

= $0.47 + $0.20 + $5.89

= $6.56

Thus, the variable cost per unit is $6.56

Now, the total monthly fixed cost is equals to

= Barber base rate + extra salary for manager + advertising + rent + utilities + magazine

where,

Barber base rate is = base rate × number of barbers

= $1,560 × 7

= $10920

And other values are given in the question

So, put these values in the above equation

Thus, the monthly Fixed cost is equals to

= $10,920 + $510 + $250 + $990 + $170 + $20

= $12,860

Hence, the total monthly fixed cost is $12,860