Planning and Budgeting

Andres Hair Stylling employs 5 barbers at $9.90 per hour, 40 hours per week, and 50 weeks per year. The proceeds rate applies regard slight of the number of haircuts performed by the barber. amend expenses integral $1,750 per month and the live for lave per client is $0.40. The centre terms for each hair cut is $12.00. Using this data, I put in the following information. 1. Contribution delimitation is sales r steadyue less variable be. It is the amount available to acquit for glacial be and provide any profit aft(prenominal) variable costs have been paid. (Wikipedia, 2006) Find the contribution boundary line per haircut: Unit sales damage - unit variable cost = contribution margin 12.00 Per cut - 0.40/shampoo = contribution margin $11.60 = contribution margin 2. The bang up even check is the level of sales at which revenue equals expenses and net income is zero. (Horngren, 2005) A break down even point is typically calculated in fix for businesses to determine if it would be profitable to sell a proposed product, as opposed to attempting to modify an existing product sort of so it can be made lucrative. Determine the break even point: Break-Even Point in Units = Total firm cost / Contribution Margin per Unit Break-even point in Units = 21,000 rent, periodic + 99,000 salaries, yearly / 11.60 Break even point in Units = 10,345 haircuts 3.

Operating income is a stride of a companys earning power from ongoing operations, equal to earnings ahead deduction of interest payments and income taxes. The direct income for 20,000 haircuts: Revenues - variable costs - fixed costs = operating income 20,000 haircuts x $12 = $! 240,000 $0.40 shampoo x 20,000 = $8,000 $1,750 rent x 12 months = $21,000 50 weeks x (9.90/hour x 40 hours) x 5 barbers = $99,000 $240,000 - $8,000... If you want to get a full essay, grade it on our website: BestEssayCheap.com

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