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John owns the Campus Cutter Barber Shop. He employs five barbers and pays each a base salary of $$1,000$ per month. One of the barbers serves as the manager and receives an extra $$750$ per month. In addition to the base salary, each barber receives a commission of $$8$ per haircut. Each barber can do as many as $20$ haircuts a day, but the average is $14$ haircuts each day. The Campus Cutter Barber Shop is open an average of $25$ days per month and charges $$20$ per haircut. Other costs are incurred as follows:

Advertising

$$750$ per month

Rent

$$1,000$ per month

Supplies

$$2\mathrm{.}50$ per haircut

Utilities

$$350$ per month, plus

$$0\mathrm{.}75$ per haircut

Magazines

$$150$ per month

Cleaning supplies

$$0\mathrm{.}75$ per haircut

a$.$ What is the contribution margin ratio?

b$.$ What is the break$-$even point in number of haircuts?

c$.$ What is the break$-$even point in dollars?

d$.$ What is the break$-$even point as a percentage of maximum capacity?

e$.$ How many haircuts must be given to earn a monthly profit of $$6,000$ after taxes. The tax rate is $40\%.$

f$.$ If $1,500$ haircuts are given in a month, what is the margin of safety ratio?

g$.$ If $1,500$ haircuts are given in a month, what is the degree of operating leverage?

h$.$ What is the change in income if the number of haircuts increases by $20\%?$

i$.$ What is the change in income if the number of haircuts decreases by $20\%$

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