A cut Above Hair Design
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- Exhibit 2, contd
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Exhibit 2 PROPOSED PROFIT SHARING PROGRAM For the sake of illustration the following assumptions are made: - total revenue of the Beauty Salon $100,000 - total fixed costs represent 28% of the revenue $100,000 X 0.28 = $28,000 - total variable costs excluding salaries and wages represent 14% of the revenue $100,000 x 0.14 = 14,000 - 5 full time hair stylists working 37 hours a week. - each stylists works 48 weeks during the year 52 weeks
2) weeks vacation 2) weeks other (sick days, mortality leaves etc) 48
- total number of hours worked per week in the Beauty Salon 37 hours x 5 employees - 185 hours - variable cost per week worked $14,000 - 48 $291.67 - variable cost per hour worked $291.67 - 185 $1.58 - fixed costs per week worked $28,000 - 48 - 583.33 - fixed costs per hour worked $583.33 + 185 - $ 3.15 Total Revenue/per week - $100,000 -- 48 weeks = $2,083 Assume that the amount of sales brought by each stylist varies from $11.50 to $13.15 Exhibit 2, cont'd Revenue/hour $11.50 12.50 13.15 Variable cost/hour (1.58) (1.58) (1.58) contribution $9.92 $10.92 $11.57
fixed cost/hour amount to be shared $1.77 $2.77 $ 3.42
to employer $0.98 $139 $1.54 employee total pay $214.23 $236-43 $254-56 NB: the variable costs can be allocated to take into consideration the fact that a new hair stylist may use less products because she may have fewer clients then the others. Further assume that if one hair stylist has less than one year experience while the other four have more than one year then the variable costs could be allocated accordingly- if the stylist that has less than one year contributes $1.00/hour to the variable costs then the other four must contribute $1.72 in order to cover the total weekly variable costs of $291.67 $291-67 - $37-00 - $254.67 - 4 - $63.68 - 37 - $1.72 Exhibit 3 1989 PRICE LIST Shampoo cut and blowdry Ladies: $12.00 Men & Teens: $10.00 Children(5-12 yrs) $7.00 Under 5$6.00
Permanent & semi-permanent. $24.00 Temporary rinse: $1.75 Toners: $10.00 Neutralizing & cut: $48.00 Neutralizing:$38.00 Shampoo & Set Seniors: $8.00 Regulars: $8.50
Seniors: $16.00 Regulars: $16.50
Shampoo Blowdry & Curling Iron: $8.50 Exhibit 4 FANTASTIC SAMS 1989 PRICE LIST Regular Special Color only $25.00 $19.95 Color shampoo & Cut $35.00 $29.95 Hi-lites $40.00 $34.95 Shampoo & Set $10.00 Shampoo Cut & Set $16.00 $12.95 Perm Plus $45.00 $34.95 (includes cut & set) Quick & Easy Perm $30.00 (perm only wear hair curly) The works perm $60.00 (cut & set plus 1 bottle of Shampoo and 1 bottle of conditioner) Men's Style & Finish $10.00
A CUT ABOVE HAIR DESIGN ADVERTISEMENTS  Source: Company Records Exhibit 5 (Con’d) A CUT ABOVE HAIR DESIGN ADVERTISEMENTS Source: Company Records  Directory: cases download cases download -> Made in Atlantic Canada cases download -> Copyright 0 1993, the Atlantic Entrepreneurial Institute. Reproduction of this case is allowed without permission for educational purposes cases download -> Scotian Pride Download 0.96 Mb. Share with your friends:
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