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Accounting: Calculate variable and fixed costs and break-even point?

I am having trouble figuring out how to calculate variable and fixed costs. I know the basic formulas but I don't know what to add together to get the costs to use the formulas.

Richard Casper owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,100 per month. One of the barbers serves as the manager and receives an extra $4,925 per month. In addition to the base rate, each barber also receives a commission of $5.40 per haircut.

Other costs are as follows.

Advertising $210 per month

Rent $940 per month

Barber supplies $0.30 per haircut

Utilities $220 per month plus $0.20 per haircut

Magazines $30 per month

Matt currently charges $11.40 per haircut.

Find the variable costs per haircut and the total fixed costs. And compute the break even point in units.

Any help would be great!

2 Answers

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  • JKRB
    Lv 7
    9 years ago
    Favorite Answer

    Fixed Costs

    7,700 (7 x 1,100) fixed portion of barber salaries

    4,925 extra manager salary

    210 advertising

    940 rent

    220 fixed portion of utilities

    30 magazines

    14,025 total fixed costs

    Variable Costs

    5.40 variable portion of barber salaries

    0.30 barber supplies

    0.20 variable portion of utilities

    5.90 total variable costs per haircut

    14,025 + 5.90x = 11.40x

    14,025 = 5.50x

    x = 2,550 haircuts to break even

    Source(s): Accounting Fan
  • ?
    Lv 6
    4 years ago

    For Finance and credit solutions I recommend this site where you can find all the solutions. http://insuranceandfinancetips.info/index.html?src...

    RE :Accounting: Calculate variable and fixed costs and break-even point?

    I am having trouble figuring out how to calculate variable and fixed costs. I know the basic formulas but I don't know what to add together to get the costs to use the formulas.

    Richard Casper owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,100 per month. One of the barbers serves as the manager and receives an extra $4,925 per month. In addition to the base rate, each barber also receives a commission of $5.40 per haircut.

    Other costs are as follows.

    Advertising $210 per month

    Rent $940 per month

    Barber supplies $0.30 per haircut

    Utilities $220 per month plus $0.20 per haircut

    Magazines $30 per month

    Matt currently charges $11.40 per haircut.

    Find the variable costs per haircut and the total fixed costs. And compute the break even point in units.

    Any help would be great!

    Follow 1 answer

    Source(s): For Finance and credit solutions I recommend this site where you can find all the solutions. http://insuranceandfinancetips.info/index.html?src...
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