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Andre's Hair Styling

In: Business and Management

Submitted By ivanally13
Words 894
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ACCT310 - 1304B – 07
Andre’s Hair Styling
American Intercontinental University Online
December 1, 2013

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...

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