Compute the price per haircut john should have charged

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Reference no: EM131884741

Problem

John Martin, now retired, owns the Corner Barber Shop. He employs 5 barbers and pays each a base rate of $500 per month. One of the barbers serves as the manager and receives an extra $300 per month. In addition to the base rate, each barber also receives a commission of $3.00 per haircut. A Barber can do as many as 20 haircuts a day, but the average is 14 haircuts per day. The corner Barber Shop is a corporation with a 30% tax rate and is open 24 days a month. Other costs are as follows. Advertising $200 per month, Rent $400 per month Barber supplies $0.90 per haircut, Utilities $175 per month plus $0.35 per haircut, Magazines $25 per month, Cleaning supplies $.15 per haircut .John currently charges $8.00 per haircut. Required: (a) John wants to earn $2,160 in after-tax operating profits. Compute the number of haircuts that must be given to reach this goal in June. (b) In June, only 1,500 haircuts were given. Compute the price per haircut John should have charged in June to earn $2,160 in after-tax operating profits.

Reference no: EM131884741

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