Question

I need an answer for a Beauty Salon. My product I would be selling is Shampoo/Conditioning for $10.00. Average service is $50.00. The Question that must be answer is below:

In this week's assignment,you will forecast sales and explore very basic financial building blocks.These basic calculations are central to providing focus and measuring financial progress and health. You will create all these numbers--and while there are no absolute right or wrong answers-try to be as practical and real-world as possible. Any business will have certain fixed cost expenses present that are not directly tied to units produced/sold. Businesses will also have certain variable cost expenses that are directly tied to units produced/sold. From these data, you can determine your break-even point in both units sold and dollars. Referring to your small business venture, discuss and calculate the following: 1. Last week, you set a price for your product/service. Retrieve that to help calculate revenue. Next, decide how many sales (in units) you would make in a year (factoring in all decisions made so far--target market, competition, etc.).What is your gross revenue projection for the year? (unit price x units sold = revenue) 2. There are fixed costs to consider. Give some basic examples of fixed cost expense categories for a business such as yours. Estimate what the associated fixed cost expenses will be on an annual basis for your venture. What is this figure? 3. There are variable costs to consider. Give some basic examples of variable cost expense categories for a business such as yours. Estimate what the associated variable cost expenses will be on a per-unit produced/sold basis. Based on sales projections in #1 above, what then is the total variable cost expenses for the year? 4. Combine total fixed costs and total variable costs. This is your total expenses. What is this figure? 5. Figure your net profit from gross revenue minus total expenses. What is this figure? 6. What is your break-even point in dollars? What is your break-even point in units sold?

Yes it is for a Salon Business

In this Salon I will sell products and offer services

Services are

Shampoo and Sets $25.00

Coloring of Hair $60.00

Relaxing the hair $75.00

Hair Cuts start at $10.00 up to $60.00

Styles starts at $25.00

Products that will be sold are:

Shapoo $10.00

Conditioning $10.00

A set of the two $17.00

Brushes $5.00

Combos $6.00

Hair Dryers $40.00

Curling Irons started at $20.00

These are some of my items for the Salon, I was thinking and average amount of everything giving one figure and coming up with my answer from there.

Answer 1

As per rules I will answer the first 4 subparts of the question

1:

Total Revenue

1054000

	Services					Product
	Shampoo and sets	Coloring	Relaxing	Hair cuts	Styles	Shampoo	Conditioning	Set of two	Brushes	Combos	Hair dryers	Curling Irons
Units	1000	1500	2000	4000/3000/1200	4000/3000/1200	3000	2700	1000	3000	2500	2000	2000/1500/500
Price per unit	25	60	75	10	25	10	10	17	5	6	40	20
				30	40							30
				50	50							40
Total Revenue	25000	90000	150000	190000	280000	30000	27000	17000	15000	15000	80000	135000

2: Fixed costs are costs which do not vary as per sales volume. Some examples are depreciation and rent of building. Theses are estimated as Depreciation of equipment = 8000 and Rent of building = $24000. Salaries of staff = $30,000

3: Variable costs vary in direct proportion to sales. In this scenario the costs are cost of material such as shampoo, color and cost of utilities such as electricity, lighting etc. Also there will be transport cost on products purchased for sale.

	Services					Product
	Shampoo and sets	Coloring	Relaxing	Hair cuts	Styles	Shampoo	Conditioning	Set of two	Brushes	Combos	Hair dryers	Curling Irons
Variable cost per unit	5	15	20	5	10	2	2	5	1	1	5	5
Variable cost	5000	22500	40000	41000	82000	6000	5400	5000	3000	2500	10000	20000
Total variable cost	242400

4: Total expense = Total fixed + variable = 8000+24000+30000+242400 = $304400

WORKINGS