Business Homework Solutions
Problem
#15325

Fine contribution margins

A barber has asked me evaluate his business.  He has 5 barbers working for him (he doesn't cut hair).  Each barber is paid $9.90/hr and works 40-hrs week and a 50-week year, REGARDLESS of the number of haircuts.  There is rent and fixed expenses ($1,750) per month.  Assume the only service performed is haircuts, the unit price is $12.  The barber asked me to find the following information.
Find the contribution margin per haircut.  Assume that the barber's compensation is a fixed cost.  Determine the annual break-even point, in number of haircuts.  What will be the operating income if 20,000 haircuts are performed?
HELP!!!

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