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Andre has asked you to evaluate his business, Andre s Hair Styling. Andre has five barbers working for him. (Andre is not one of them.) Each barber is paid $9.90 per hour and works a 40 hour week and a 50 week year, regardless of the number of haircuts. Rent and other fixed expenses are $1,750 per month. Hair shampoo used on all clients is .40 per client. Assume that the only service performed is the giving of haircuts (including shampoo), the unit price of which is $12. Andre has asked you to find the following information.

Find the contribution margin per haircut. Assume that the barbers compensation is a fixed cost. Show calculations to support your answer.

Determine the annual break even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer.

What will be the operating income if 20,000 haircuts are performed? Show calculations to support your answer.

Suppose Andre revises the compensation method. The barbers will receive $4 per hour plus $6 for each haircut. What is the new contribution margin per haircut? What is the annual break even point (in number of haircuts)? Show calculations to support your answer.

Silver Lakes is studying whether to outsource its Human Resources (HR) activities. Salaried professionals who earn $397,000 would be terminated; in contrast, administrative assistants who earn $120,000 would be transferred elsewhere within the company. Miscellaneous departmental overhead is expected to decrease by $20,000 and $25,000 of corporate overhead, previously allocated to HR would be picked up by other departments. If Silver Lakes can secure needed HR services locally for $410,000, what would the net savings (net cost) by outsourcing?

At the end of its first year, the trial balance of Eaton Company shows Equipment $30,000 and zero balances in Accumulated Depreciation Equipment and in Depreciation Expense Equipment.

At the end of its first year, the trial balance of Eaton Company shows Equipment $30,000 and zero balances in Accumulated Depreciation Equipment and in Depreciation Expense Equipment. Depreciation for the year is estimated to be $6,000.

After the adjusting entries have been posted to the T accounts, how will the equipment account balance be presented on the balance sheet?