THIS IS FOR PROFESSOR SPEEDSTAR
Type: Individual ProjectUnit: Activity-Based Costing and Process CostingDue Date: Tue, 4/11/17Grading Type: NumericPoints Possible: 150 Points Earned: 0Deliverable Length: Excel spreadsheet and 1-2 pagesView objectives for this assignmentGo To:Assignment DetailsLearning MaterialsReading AssignmentMy Work:Online Deliverables: SubmissionsLooking for tutoring? Go to SmarthinkingCollapse All | Expand AllAssignment Details Assignment DescriptionConsider 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. 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.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.Using the information provided, provide a memo to Andre explaining the completed analysis and how he should use this information to monitor the operations of the barber shop. The memo should explain the cost associated with the barber shop including their relationships.Please submit your assignment.For assistance with your assignment, please use your text, Web resources, and all course materials.Your assignment will be graded in accordance with the following criteria. Click here to view the grading rubric.
