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2 October, 08:44

Vin Diesel owns the Fredonia Barber Shop. He employs 7 barbers and pays each a base rate of $1,560 per month. One of the barbers serves as the manager and receives an extra $510 per month. In addition to the base rate, each barber also receives a commission of $5.89 per haircut. Other costs are as follows. Advertising $250 per month Rent $990 per month Barber supplies $0.47 per haircut Utilities $170 per month plus $0.20 per haircut Magazines $20 per month Vin currently charges $11.56 per haircut. Determine the variable costs per haircut and the total monthly fixed costs. (Round variable costs to 2 decimal places, e. g. 2.25.) Total variable cost per haircut $ Total fixed $

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  1. 2 October, 08:56
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    The variable cost per unit is $6.56

    The total monthly fixed cost is $12,860

    Explanation:

    The computation of variable cost per hair cut is equals to

    = Barber supplies per haircut + utilities per haircut + commission per hair cut

    = $0.47 + $0.20 + $5.89

    = $6.56

    Thus, the variable cost per unit is $6.56

    Now, the total monthly fixed cost is equals to

    = Barber base rate + extra salary for manager + advertising + rent + utilities + magazine

    where,

    Barber base rate is = base rate * number of barbers

    = $1,560 * 7

    = $10920

    And other values are given in the question

    So, put these values in the above equation

    Thus, the monthly Fixed cost is equals to

    = $10,920 + $510 + $250 + $990 + $170 + $20

    = $12,860

    Hence, the total monthly fixed cost is $12,860
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