Planning and Budgeting

Andres Hair Stylling employs 5 barbers at $9.90 per hour, 40 hours per week, and 50 weeks per year. The usefulness rate applies regard handsome of the number of haircuts performed by the barber. effected expenses integral $1,750 per month and the tolerate for lave per client is $0.40. The get along monetary value for each hair cut is $12.00. Using this data, I put in the by-line information. 1. Contribution tolerance is gross taxation r steadyue less variable star be. It is the amount available to endure for glacial be and declare oneself any profit by and by variable costs get hold of been paid. (Wikipedia, 2006) Find the constituent margin per haircut: Unit sales damage - unit of measurement variable cost = donation margin 12.00 Per cut - 0.40/shampoo = contribution margin $11.60 = contribution margin 2. The bang up eve target is the train of sales at which revenue equals expenses and net income is zero. (Horngren, 2005) A break up even point is typically calculated in fix for businesses to determine if it would be economic to sell a proposed product, as opposed to attempting to modify an breathing product instead so it can be make lucrative. Determine the break even point: Break-Even Point in Units = Total Fixed cost / Contribution Margin per Unit Break-even point in Units = 21,000 rent, periodic + 99,000 salaries, per year / 11.60 Break even point in Units = 10,345 haircuts 3.

Operating income is a footstep of a companys earning power from ongoing operations, equal to earnings forward deduction of interest payments and income taxes. The direct income for 20,000 haircuts: Revenues - variable costs - fix 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, order it on our website: Orderessay

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