Abstract
Andre has asked me to look over his existing way of doing business. His questions revolve around contribution margin, fixed costs, and variable costs. His questions are answered in detail. An Excel spreadsheet is included. Andre has a thriving barber shop business with five full time barbers working for him. He asked me to look at his business and determine if paying the barbers by the haircut with little hourly salary is better than his current business plan of paying the five barbers a larger hourly payment with no additional pay per haircut. He asked that I answer the following four questions.
1.…show more content… Conclusion Andre would be better off keeping his original payment plan of paying the five barbers $9.90 an hour. The break-even point changes from 10,345 at this rate, to 10,893 haircuts at the revised rate. The Excel spread sheet will verify my calculations.
