Andre has asked you to evaluate his business, Andre’s HairStyling. Andre has five barbers working for him. (Andre is not oneof them.) Each barber is paid $9.90 per hour and works a 40-hourweek and a 50-week year, regardless of the number of haircuts. Rentand other fixed expenses are $1,750 per month. Hair shampoo used onall clients is .40 per client. Assume that the only serviceperformed is the giving of haircuts (including shampoo), the unitprice of which is $12. Andre has asked you to find the followinginformation.
Find the contribution margin per haircut. Assume that the barbers’compensation is a fixed cost. Show calculations to support youranswer.Determine the annual break-even point, in number of haircuts.Support your answer with an appropriate explanation. Showcalculations 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 willreceive $4 per hour plus $6 for each haircut. What is the newcontribution margin per haircut? What is the annual break-evenpoint (in number of haircuts)? Show calculations to support youranswer.
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