Premium Essay

Submitted By ivanally13

Words 894

Pages 4

Words 894

Pages 4

Andre’s Hair Styling

American Intercontinental University Online

December 1, 2013

ABSTRACT

The following information is going to contain information from Andre’s hair styling. The information is going to detail the contribution margin, the annual break-even point, as well as the operating income.

Fixed costs consist of the barbers so to figure that out we must take their nine dollars and ninety cents an hour that they are paid and multiply that by the barbers forty hour work week and then multiply that by the fifty weeks that they work a year and then again multiply by the five different barbers that are working at Andre’s Hair Styling; we then get ninety-nine thousand dollars as the outcome. ($9.90*40 hours a week*50 weeks a year* 5 barbers) = $99,000 which added together is one hundred and twenty thousand dollars.

Other expenses for Andre’s Hair Styling consists of the remaining fixed costs per month which is one thousand seven hundred and fifty and then multiply that by twelve months and we get twenty-one thousand dollars a year for other fixed expenses. ($1,750 fixed expenses * 12 months in a year) = $ 21,000

Now that we have done all of that calculations to begin answering the questions at hand we will go from 1-4. 1. The first task is to find the contribution margin per hair cut at the same time assuming that the barber’s compensation is a fixed cost. So we take the following in mind. Andre’s hair styling is charging twelve dollars for a haircut per customer. The variable cost here is the forty cents per customer for shampoo. So we take twelve dollars subtracted from forty cents and we get eleven dollars and sixty cents as the contribution margin.

2. Next, we want to determine the annual break-even point in the number of haircuts. So we take the total yearly amount for the barbers as well as the other...

Premium Essay

...Andre’s Hair Styling 05/15/2016 Draft A cost accounting system (also known as product costing system or costing system) is an outline utilized by businesses to guesstimate the cost of their manufactured goods for lucrativeness evaluation, inventory valuation and cost control. Appraising the precise cost of products is precarious for moneymaking operations. A company needs to recognize which products are lucrative and those that are not, and this can be determined when it has assessed the accurate cost of the product Andre’s Hair Styling 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. 1. Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost. Show calculations to support your answer. To find the contribution margin per haircut the formula is: Contribution margin= Selling Price – Unit Variable Costs Selling Price= $12 Unit Variable Costs= $0.40 $12 - 0.40= $11.60 The Contribution Margin per haircut is $11.60 2. Determine the annual......

Words: 561 - Pages: 3

Premium Essay

...Unit 3 – Individual Project American InterContinental University ACCT310 – Managerial Accounting Abstract This paper will provide explanation of contribution margins, a determination of an annual break-even point, and operating income of Andre’s Hair Styling with calculations supporting answers. All calculations of business are based on each barber being paid $9.90 per hour working 40 hours per week and 50 weeks per year. Rent and other expenses equal $1,750.00 per month. Expenses include forty cents per client for shampoo, while services include haircuts priced at twelve dollars each. A revised or new contribution method, where barbers will receive wages of $4.00 per hour plus $6.00 per haircut. Contribution margin is revenue minus variable expenses. Meaning how much a company’s revenue will contribute to fixed expenses and net income. The contribution margin is also useful in determining a company’s break-even point (AccountingCoach.com, n.d.). At Andre’s Hair Styling haircuts are $12.00 with a shampoo expense of $ .40, while barber compensation is a fixed cost. Contribution margin per head Hair cut price – Shampoo expense $12 - $.40 = $ 11.60 per head When planning a company’s future, management must plan to predict the volume of activity, the cost incurred sales to be made, and profits to be received. An important tool to accomplish this is......

Words: 634 - Pages: 3

Premium Essay

...Financial Analysis Barber Shop Andrea Mitchell | Abstract Andre’s Hair Styling has asked me to find calculations on evaluating his business. By assuming the fixed cost, contribution cost, fixe expenses, and operating cost. I will perform an evaluation on the total cost that will be needed to determining a correct operational cost. Andre’s Hair Styling is requiring the findings of fixed cost of haircutting and the expenses of one service that they perform. The service consists of haircuts and shampoos together. The contribution margin is $12.40. This includes hair cutting and shampoo. The total fixed expenses = Barbers Salaries+ Annual Rate. This came up to $210.099 rounded off to $211,000. The Barbers Salaries= number of barbers x wages per hour x number of hours per week x number of work weeks a year = 9.90x5 x40x50=$99,000. Annual rent = $21,000(monthly rent x 12). For the business to break even the salon would make $100,750. This is calculated by $.040 x 12 years ($99,000 +$1,750). The annual number of haircuts would be 8,125. ($100,750/ $12.40=$8,125) Each barber would have to do 1,625 per year or 32.50 per day 6.5 cuts per week. To revise the compensation method at $4per hour and $6 for the haircut the new contribution margin per hair cut would be $6. The annual rate would be $4000. The total fixed expenses would be$40,000. (4x 5 x40 x50) Annual Rent =......

Words: 350 - Pages: 2

Premium Essay

...| | | Abstract Andre will calculate his business, Andre’s Hair Styling; we will take a look at five barbers working for him. He will look at the rent and other fixed expenses and calculate all expenses to have a overhead amount and how to come to monthly and annually cost for hair shampoo used on all clients. . Managerial Accounting Contribution margin is the quantity of profits per merchandise that is accessible to “contribute” which goes towards the fixed expenses and/or the revenue of the business. In view of the facts that for digital item for consumption, the variable rate are naturally extremely small, or next to zero, the majority of the profits earned from the transaction of a manufactured goods from the payment margin. Presumptuous the contribution margin (unit price – unit variable cost) > 0, at that time the manufactured goods is worth selling, now that the fixed cost has been sunk. This in addition assumes the creation does not cannibalize sales from any other product in the product column, so if the price need to be carefully considered. Contribution Margin = Unit Price – Unit Variable Cost Break Even Analysis is the calculated to establish to see the amount of product a business has to put on the market in order to break even on that manufactured goods. It’s useful analysis to calculate the impact of diverse marketing decision. Calculating the contribution margin you have to subtract the unit variable fee from the transaction......

Words: 639 - Pages: 3

Premium Essay

...American InterContinental University Planning & Budgeting – Contribution Margin ACCT310-1302B-06 7/7/2013 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 .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. 1. Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost. Show calculations to support your answer. Formula: Cost of haircut – variable cost (shampoo) = contribution margin $12 - $.40 = $ 11.6 Contribution Margin 2. Determine the annual break-even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer. The break-even point is going to be the point in which your gains are equal to your losses. Anything past this point is profit for your business. Formula: Total Fixed Costs / Contribution Margin = Break-even Point 5 (employees) * $9.90 * 40 * 50 = $99,000 + 1750 (monthly costs) * 12 (months) = $120,000 120,000 / 11.6 = 10,334.83 Haircuts are needed to break even 3. What......

Words: 429 - Pages: 2

Premium Essay

...The contribution margin per haircut at Andre’s Hair Styling is $11.60. To arrive at this total, we must know how compute the contribution margin. The contribution margin is the sales price per unit minus the total variable cost per unit (Wild & Shaw, 2012). In this case, the sales price per unit is the price of each haircut, which is $12.00 per head. The variable cost per unit is the cost of the shampoo per head, which is .40 cent per head. The formula is: $12 - $0.40 = $11.60. The contribution margin ratio is 0.9666 or 96.66%. To obtain this number, you must divide the contribution margin per unit by the sale price per unit. The formula is: $11.60 / $12.00 = 0.9996. The Annual Break Even Point, in the number of haircuts will be 10,345 haircuts. To arrive at this total, we must first determine the fix cost of the operation. In this case the fix cost is the annual salary of the five barbers and the annual rent of the business (Wild $ Shaw, 2012). The salary of the barbers is $9.90 an hour, times 40 hours a week, times 50 weeks a year, equaling $99,000 annually. The rent is $1750 a month, time 12 months, equaling $21,000 annually. The formula for fix cost is: $99,000 + $21,000 = $120,000. To get the annual break-even point we must divide the fix cost by the contribution margin (Wild & Shaw, 2012). The formula will be $120,000 / $11.60 = 10,345 cuts. The operating income for the barber shop if 20,000 haircuts are performed will be $112,000. The operating income......

Words: 525 - Pages: 3

Premium Essay

...ASSIGNMENT NO. 1 CHAPTERS 1-3 CHAPTER 1: Problem 1.1 for Self-Study: What are the Differences between Financial and Managerial Accounting? Answer: Financial Accounting - deals with reporting to people outside the organization - the users of the financial accounting reports include shareholders (owners) of a corporation, creditors (those who lend money to a business), financial analysts, labor unions, and government regulators. - Uses historical or current data Managerial Accounting - focuses on the activities inside the organization - many companies call it finance or corporate finance - no required rules and regulations such as Generally Accepted Accounting Principles or Financial Reporting Standards - can and does use projections about the future - managerial accounting information must meet a cost-benefit test or the benefit from providing information must exceed the cost of obtaining the information - new initiatives such as activity-based costing and the balanced scorecard must pass the aforementioned tests Problem 1.2 for Self-Study: Match the concept with the definition. Concept Definition Cost a. Costs directly related to a cost object Opportunity cost b. A sacrifice of resources Expense c. Costs not directly related to a cost object Cost Object d. Any item for which a manager wants to measure a cost Direct Costs e. A cost charged against revenue in an accounting period Indirect Costs f. The return that could be......

Words: 3433 - Pages: 14

Free Essay

...cover next page > title author publisher isbn10 | asin print isbn13 ebook isbn13 language subject publication date lcc ddc subject : : : : : : : : : : : cover next page > < previous page page_i next page > Page i 1100 Words You Need to Know Fourth Edition Murray Bromberg Principal Emeritus Andrew Jackson High School, Queens, New York Melvin Gordon Reading Specialist New York City Schools . . . Invest fifteen minutes a day for forty-six weeks in order to master 920 new words and almost 200 useful idioms < previous page page_i next page > < previous page page_ii next page > Page ii © Copyright 2000 by Barron's Educational Series, Inc. Prior edition © Copyright 1993, 1987, 1971 by Barron's Educational Series, Inc. All rights reserved. No part of this book may be reproduced in any form, by photostat, microfilm, xerography, or any other means, or incorporated into any information retrieval system, electronic or mechanical, without the written permission of the copyright owner. All inquiries should be addressed to: Barron's Educational Series, Inc. 250 Wireless Boulevard Hauppauge, NY 11788 http://www.barronseduc.com Library of Congress Catalog Card No. 00-030344 International Standard Book Number 0-7641-1365-8 Library of Congress Cataloging-in-Publication Data Bromberg, Murray. 1100 words you need to know / Murray Bromberg, Melvin Gordon. p. cm. Includes index. ISBN 0-7641-1365-8 1. Vocabulary. I. Title: Eleven hundred words you......

Words: 125626 - Pages: 503

Premium Essay

...Instructor’s Manual and Test Bank to accompany A First Look at Communication Theory Sixth Edition Em Griffin Wheaton College prepared by Glen McClish San Diego State University and Emily J. Langan Wheaton College Published by McGrawHill, an imprint of The McGrawHill Companies, Inc., 1221 Avenue of the Americas, New York, NY 10020. Copyright Ó 2006, 2003, 2000, 1997, 1994, 1991 by The McGrawHill Companies, Inc. All rights reserved. The contents, or parts thereof, may be reproduced in print form solely for classroom use with A First Look At Communication Theory provided such reproductions bear copyright notice, but may not be reproduced in any other form or for any other purpose without the prior written consent of The McGrawHill Companies, Inc., including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. PREFACE Rationale We agreed to produce the instructor’s manual for the sixth edition of A First Look at Communication Theory because it’s a first-rate book and because we enjoy talking and writing about pedagogy. Yet when we recall the discussions we’ve had with colleagues about instructor’s manuals over the years, two unnerving comments stick with us: “I don’t find them much help”; and (even worse) “I never look at them.” And, if the truth be told, we were often the people making such points! With these statements in mind, we have done some serious soul-searching about the texts that so many......

Words: 159106 - Pages: 637