Question

andre hair styling 5 people working for him each barber is paid 9.90 per hour 40 hours weeks and 50 week year rent 1750 per month.40 per client unit price $12 what will be the operating income if 20000 haircuts

Answer 1

1. Contribution margin = revenue - variable costs
= $12 - $0.40 = $11.60.

2. Annual Break Even Point.
Fixed Costs = Workers + Rent
5 workers * $9.90 * 40 * 50 + $1750 * 12 = $99,000 + $21,000 = $120,000

120000 / 11.6 = 10,345 Haircuts.

3. Operating Income = Gross Profit - Operating Expenses
20,000 * $11.4 - $120,000 = $108,000

4. Contribution margin = revenue - variable costs
= $12 - $6 - $0.40 = $5.60
Break Even:
Fixed Costs = Workers + Rent
5 workers * $4 * 40 * 50 + $1750 * 12 = $40,000 + $21,000 = $61,000

61000 / 5.6 = 10,893 Haircuts