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05-10-2020
Business

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You run a nail salon. Fixed monthly cost is $5,699.00 for rent and utilities, $6,473.00 is spent in salaries and $1,274.00 in insurance. Also every customer requires approximately $3.00 in supplies. You charge $99.00 on average for each service. You are considering moving the salon to an upscale neighborhood where the rent and utilities will increase to $10,510.00, salaries to $6,054.00 and insurance to $2,016.00 per month. Cost of supplies will increase to $7.00 per service. However you can now charge $145.00 per service. At what point will you be indifferent between your current location and the new location

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codiepienagoya codiepienagoya

07-10-2020

Answer:

The answer is "151".

Explanation:

Indifference measurement Niveau between the current position and proposed position:

[tex]\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \left\begin{array}{ccc} &Accessible& Submitted\\\end{array}\right \\\\\left\begin{array}{ccc}Sale&106& \ \ \ \ \ \ \ \ \ \ \ \ 155 \\ less: Variable \ cost&2& \ \ \ \ \ \ \ \ \ \ \ \ 7 \\ \ contribution&1 04 & \ \ \ \ \ \ \ \ \ \ \ \ 148 \end{array}\right \\[/tex]

[tex]\left\begin{array}{ccc}\text{Fixed costs: Rent and utilities}& 5,414 & 11,226 \\salaries& 6,175 & 6,167\\insurance &1,162 &2,006 \\ Total&12,751 &19,399 \end{array}\right \\\\[/tex]

[tex]\text{Level of indifference} = \frac{\text{Fixed cost} }{\text{ contribution per unit}}[/tex]

[tex]= \frac{(19,399- 12,751)}{(148- 104 )} \\\\ =\frac{6,648}{44} \\\\ = 151[/tex]

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