Andre has two situations, let us take a look at them:
- Each barber (Total 5 barbers) is paid $9.90 per hour and works 40 hours a week and 50 weeks in a year, regardless of the number of haircuts.
- The barbers receive $4 per hour plus $6 for each haircut.
In both the situations the following remain the same:
Situation 1:
Contribution Margin allows the company or an individual to determine the profitability of their service or product. To calculate the Contribution Margin we will have to subtract the Variable cost per hair cut form the Price of each Hair cut. The variable costs are the expenses that vary with the quality of the output. They differ ...