Problem quicky legal services lawyers work in three

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: At 10,000 haircuts? Write your answer below. In some places, you will need to use your intuition to reach an answer. 5,000 Haircuts 10,000 Haircuts Barbers Hair supplies Other supplies Utilities Rent Total ••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••••• Analysis. Let’s look at each cost item separately. Barbers. At the moment, we have 5 barbers (2,000 haircuts ÷ 400), who have a total cost of $11,000. Therefore, the cost per barber must be $2,200 per month ($11,000 ÷ 5 barbers). A barber can deliver 400 haircuts a month. That means that every time we increase our haircuts by 400, we must add a barber. At 5,000 haircuts per month, we will need 12.5 barbers (5,000 ÷ 400), but since we cannot add half a barber, we must have 13 barbers for 5,000 haircuts. You may have decided to “stretch” your 12 barbers, and not hire the 13th barber until total haircuts reach 5,200 (13 x 400). That is a very reasonable approach. If you take the “stretch” approach, your barber cost for 5,000 haircuts will be $26,400 (12 x $2,200).) That is...
View Full Document

This document was uploaded on 03/30/2014.

Ask a homework question - tutors are online