Problem 18-02A a-b, d (Part Level Submission) Crane Diesel owns the Fredonia Barber Shop. He employs 6 barbers and pays each a base rate of $1,490 per month. One of the barbers serves as the manager and receives an extra $600 per month. In addition to the base rate, each barber also receives a commission of $10.40 per haircut. Other costs are as follows. Advertising $220 per month Rent $950 per month Barber supplies $0.50 per haircut Utilities $195 per month plus $0.10 per haircut Magazines $30 per month Crane currently charges $20 per haircut.

Instructions

(a)

Determine the variable costs per haircut and the total monthly fixed costs.

(a) VC $5

(b)

Compute the break-even point in units and dollars.

(c)

Prepare a CVP graph, assuming a maximum of 1,800 haircuts in a month. Use increments of 300 haircuts on the horizontal axis and $3,000 on the vertical axis.

(d)

Determine net income, assuming 1,600 haircuts are given in a month.

The new york times (nov. 30, 1993) reported that “the inability of opec to agree last week to cut production has sent the oil market into turmoil . . [leading to] the lowest price for domestic crude oil since june 1990.” why were the members of opec trying to agree to cut production? so they could save more oil for future consumption so they could lower the price so they could raise the price why do you suppose opec was unable to agree on cutting production? because each country has a different production capacity because each country experiences different production costs because each country has an incentive to cheat on any agreement the newspaper also noted opec’s view “that producing nations outside the organization, like norway and britain, should do their share and cut production.” what does the phrase “do their share” suggest about opec’s desired relationship with norway and britain? opec would like norway and britain to keep their production levels high. opec would like norway and britain to act competitively. opec would like norway and britain to join the cartel.