### consider the following scenario andre has asked you to evaluate his business andre s 3492447

Consider the following scenario:

Andre has asked you to evaluate his business, Andre’s Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid \$9.90 per hour and works a 40-hour week and a 50-week year, regardless of the number of haircuts.

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Rent and other fixed expenses are \$1,750 per month. Hair shampoo used on all clients is \$0.40 per client. Assume that the only service performed is the giving of haircuts (including shampoo), the unit price of which is \$12. Andre has asked you to find the following information. Find the contribution margin per haircut. Assume that the barbers’ compensation is a fixed cost. Show calculations to support your answer. Determine the annual break-even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer.

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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 will receive \$4 per hour plus \$6 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)? Show calculations to support your answer.

Percentage

Find the contribution margin per haircut.

25%

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Determine the annual break-even point, in number of haircuts.

25%

What will be the operating income if 20,000 haircuts are performed?

25%

Suppose Andre revises the compensation method. The barbers will receive \$4 per hour plus \$6 for each haircut. What is the new contribution margin per haircut? What is the annual break-even point (in number of haircuts)?

25%