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. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on all clients is .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.
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.
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Sra

please answer and explan all for me

To find the contribution margin per haircut, we need to calculate the variable costs associated with each haircut and subtract it from the unit price.

1. Variable costs per haircut:
- Barber compensation: Each barber is paid $9.90 per hour and works 40 hours per week for 50 weeks a year. Therefore, the annual barber compensation per barber is $9.90/hour * 40 hours/week * 50 weeks/year = $19,800.
- Hair shampoo cost: $0.40 per client.

Total variable costs per haircut:
= Barber compensation per haircut + Shampoo cost per haircut.
= ($19,800 / (5 barbers)) / (40 haircuts per week * 50 weeks per year) + $0.40.
= $39.60 / 2000 + $0.40.
= $0.0198 + $0.40.
= $0.42.

2. Contribution margin per haircut:
= Unit price - Variable costs per haircut.
= $12 - $0.42.
= $11.58.

Therefore, the contribution margin per haircut is $11.58.

To determine the annual break-even point, we can divide the fixed costs by the contribution margin per haircut. The break-even point represents the number of haircuts required to cover all fixed costs.

3. Annual fixed costs:
Rent and other fixed expenses are $1,750 per month. Therefore, the annual fixed costs are $1,750/month * 12 months = $21,000.

Break-even point (in number of haircuts):
= Annual fixed costs / Contribution margin per haircut.
= $21,000 / $11.58.
≈ 1,813 haircuts.

Therefore, the annual break-even point is approximately 1,813 haircuts.

To calculate the operating income when 20,000 haircuts are performed:

4. Total contribution margin for 20,000 haircuts:
= Contribution margin per haircut * Number of haircuts.
= $11.58 * 20,000.
= $231,600.

Operating income:
= Total contribution margin - Annual fixed costs.
= $231,600 - $21,000.
= $210,600.

Therefore, the operating income when 20,000 haircuts are performed is $210,600.

If Andre revises the compensation method to $4 per hour plus $6 for each haircut, we need to recalculate the contribution margin per haircut and the annual break-even point.

5. Variable costs per haircut (revised compensation):
- Barber compensation: Each barber is paid $4 per hour and works 40 hours per week for 50 weeks a year. The additional $6 per haircut is considered a variable cost.
- Hair shampoo cost: $0.40 per client.

Total variable costs per haircut (revised compensation):
= Barber compensation per haircut + Shampoo cost per haircut.
= ($4/hour * 40 hours/week * 50 weeks/year) + $6 + $0.40.
= $8,000 + $6.40.
= $8,006.40.

6. Contribution margin per haircut (revised compensation):
= Unit price - Variable costs per haircut (revised compensation).
= $12 - $8,006.40.
= $3.60.

Therefore, the new contribution margin per haircut is $3.60.

To calculate the revised annual break-even point (in number of haircuts):

7. Revised break-even point (in number of haircuts):
= Annual fixed costs / Contribution margin per haircut (revised compensation).
= $21,000 / $3.60.
≈ 5,833 haircuts.

Therefore, the revised annual break-even point is approximately 5,833 haircuts.