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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
- JKRBLv 79 years agoFavorite 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 64 years ago
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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...