QuickHelper

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About QuickHelper

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Elementary,High School,College,University,PHD

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Accounting,Applied Sciences See all
Accounting,Applied Sciences,Business & Finance,Chemistry,Engineering,Health & Medical Hide all
Teaching Since: May 2017
Last Sign in: 356 Weeks Ago, 4 Days Ago
Questions Answered: 20103
Tutorials Posted: 20155

Education

  • MBA, PHD
    Phoniex
    Jul-2007 - Jun-2012

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  • Corportae Manager
    ChevronTexaco Corporation
    Feb-2009 - Nov-2016

Category > Accounting Posted 27 May 2017 My Price 11.00

Andre has asked you to evaluate

Question description

 

Consider the following scenario:

Andre has asked you to evaluate his business, Andre’s Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40-hour week and a 50-week year, regardless of the number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on all clients is $0.40 per client. Assume that the only service performed is the giving of haircuts (including shampoo), the unit price of which is $12. Andre has asked you to find the following information.

  • Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost. Show calculations to support your answer.
  • Determine the annual break-even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer.
  • What will be the operating income if 20,000 haircuts are performed? Show calculations to support your answer.
  • Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)? Show calculations to support your answer.

Using the information provided, provide a memo to Andre explaining the completed analysis and how he should use this information to monitor the operations of the barber shop. The memo should explain the cost associated with the barber shop including their relationships.

Answers

QuickHelper
(10)
Status NEW Posted 27 May 2017 01:05 PM My Price 11.00

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