Assignment Type: Individual Project Deliverable Length: 1-2 pages and Excel Spreadsheet Points Possible: 125 Due Date: 12/4/2011 11:59:59 PM CT Consider the following scenario: 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. 1.Find the contribution margin per haircut. Assume that the barbers' compensation is a fixed cost. Show calculations to support your answer. 2.Determine the annual break-even point, in number of haircuts. Support your answer with an appropriate explanation. Show calculations to support your answer. 3.What will be the operating income if 20,000 haircuts are performed? Show calculations to support your answer. 4.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. Grading Criteria Percentage Find the contribution margin per haircut. 25% Determine the annual break-even point, in number of haircuts. 25% What will be the operating income if 20,000 haircuts are performed? 25% 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)? 25% Please submit your assignment. For assistance with your assignment, please use your text, Web resources, and all course materials. Unit Materials Unit Materials Assignment Type: Discussion Board Deliverable Length: 3-4 paragraphs Points Possible: 75 Due Date: 12/4/2011 11:59:59 PM CT The Discussion Board (DB) is part of the core of online learning. Classroom discussion in an online environment requires the active participation of students and the instructor to create robust interaction and dialogue. Every student is expected to create an original response to the open-ended DB question as well as engage in dialogue by responding to posts created by others throughout the week. At the end of each unit, DB participation will be assessed based on both level of engagement and the quality of the contribution to the discussion. At a minimum, each student will be expected to post an original and thoughtful response to the DB question and contribute to the weekly dialogue by responding to at least two other posts from students. The first contribution must be posted before midnight (Central Time) on Wednesday of each week. Two additional responses are required after Wednesday of each week. Students are highly encouraged to engage on the Discussion Board early and often, as that is the primary way the university tracks class attendance and participation. The purpose of the Discussion Board is to allow students to learn through sharing ideas and experiences as they relate to course content and the DB question. Because it is not possible to engage in two-way dialogue after a conversation has ended, no posts to the DB will be accepted after the end of each week. Students should review the following statements and write 3–4 paragraphs that provide support for your answers: 1.Managers should base pricing decisions on both cost and market factors. In addition, they must also consider legal issues. Describe the influence that the law has on pricing decisions. 2."It is impossible to use Discounted Cash Flow methods for evaluating investments in research and development. There are no cost savings to measure, and we don’t even know what products might come out of our R&D activities." This is a quote from an R&D manager who was asked to justify investment in a major research project based on its expected net present value. How would you respond to this statement? Do you agree or disagree? Explain. Recommendations for Responding to Peer Posts •Compare the points made about the influence of the law on pricing decisions to your own. How were they similar or different? •Review a peer’s post that was different from your own regarding the use of Discounted Cash Flow methods. Did any of the points he or she made make you reconsider your position as to which costing method would be best? •If so, what points made you change your mind? •If not, what additional arguments can you make that would directly refute the points that he or she made. Grading Criteria Percentage Describe the influence that the law has on pricing decisions. 20% How would you respond to the R&D manager’s statement about Discounted Cash Flow methods? Do you agree or disagree? Explain. 20% Supporting research/arguments made 40% Response to peer posts 20% In your own words, please post a response to the Discussion Board and comment on other postings. You will be graded on the quality of your postings. For assistance with your assignment, please use your text, Web resources, and all course materials. Unit Materials