Professional Documents
Culture Documents
HOMEWORK
Session 10: Cost – Volume – Profit
P22-1A:
a.
Variable costs (per haircut):
Barbers’ commission $5.50
Barber supplies $0.30
Utilities $0.20
Total variable cost per haircut $6.00
Fixed costs:
Barbers’ salaries $5,000 ($1,000 x 5)
Manager’s extra salaries $500
Advertising $200
Rent $900
Utilities $175
Magazines $25
Total monthly fixed costs $6,800
P22-4A:
a. Assuming that a are numbers of pairs of shoes.
Current break-even point in units: 40a = 22a + 270,000
18a = 270,000
a = 15,000 (pairs of shoes)
Break-even point in units if Svetlana’s ideas are used:
38a = 22a + (270,000 + 34,000)
16a = 304,000
a = 19,000 (pairs of shoes)
Break-even point in units if Svetlana’s ideas are used is greater than that of current
break-even point.
b.
(20,000 x $ 40) – (15,000 x $ 40)
Current margin of safety ratio = = 25%
20,000 x $ 40