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P5-1A Telly Savalas owns

Price: $2.50


Telly Savalas owns the Bonita Barber Shop. He employs four barbers and pays
each a base rate of $1,000 per month. One of the barbers serves as the manager and receives
an extra $500 per month. In addition to the base rate, each barber also receives a commission
of $4.50 per haircut.


Advertising  $200 per month 
Rent  $1,100 per month 
Barber supplies  $0.30 per haircut 
Utilities  $175 per month plus $0.20 per haircut 
Magazines  $25 per month 

Instructions
(a) Determine the variable costs per haircut and the total monthly fixed costs.
(b) Compute the break-even point in units and dollars.
(c) Prepare a CVP graph, assuming a maximum of 1,800 haircuts in a month. Use increments
of 300 haircuts on the horizontal axis and $3,000 on the vertical axis.
(d) Determine net income, assuming 1,700 haircuts are given in a month.

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