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LiChan LiChan
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7 years ago
Michael is considering opening a barbershop. He has collected the following information:
   Monthly rent   $3,000
   Monthly barber salaries   $1,500
In addition to the barber salaries, Michael intends to pay a commission of 5% to his barbers for each haircut. The remaining cost of the services provided, is expected to be 15% of sales. The price of a haircut at Michael's will be $12.

a.)   How many haircuts need to be given to break-even?
b.)   How many haircuts need to be given per month to earn a profit of $24,000 per year?
c.)   What is the new break-even point if Michael was able to decrease the sales commissions to 2.5% and increase the salaries to $1,750 a month?
d.)   Which option is better for Michaelto leave the salaries and sales commissions as is or to decrease the commissions and increase the salaries? Why?
Textbook 
Survey of Accounting: Making Sense of Business

Survey of Accounting: Making Sense of Business


Edition: 1st
Author:
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mourningbirdmourningbird
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7 years ago
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LiChan Author
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7 years ago
Was looking for this exact answer, thanks
wrote...
7 years ago
Happy to help, please mark as solved
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