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KoolinIt KoolinIt
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A week ago
Jenny's Cutting Station is a new concept in haircuts; low cost and very quick. Set in a local mall, Jenny's offers 15-minute haircuts for harried shoppers who do not have time for lengthy appointments. To ensure that the clients are in and out quickly, she schedules her 5 employees based on expected client traffic. Each of the employees is paid $1,200 per month, with part of their pay coming from client tips. Jenny pays rent and overhead costs of $2,000 per month. Because of the quick nature of the service, Jenny doesn't have time to clean combs in between clients, so she uses a new comb for each customer, at a cost of $0.55 each. She also provides shampoo and conditioner for each client at a cost of $0.95 per client. The average price for a haircut is $12. Jenny pays herself $5,000 per month. What is Jenny's contribution margin ratio?

▸ 12.5%

▸ 87.5%

▸ 8.3%

▸ 83.5%
Textbook 

Managerial Accounting


Edition: 4th
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browntown345browntown345
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A week ago
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87.5%

$12.00 - ($0.95 + $0.55) = $10.50; $10.50 ÷ $12.00 = 87.5%
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Just got PERFECT on my quiz
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this is exactly what I needed
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