Answer:
Fredonia Barber Shop
a. Variable costs per haircut = $4.40
    Total monthly fixed costs = $8,910
b. Break-even point in units = 1,350
Break-even point in sales dollars = $14,850
Net income with 1,670 haircuts = $2,120
Explanation:
a) Data and Calculations:
Fixed costs:
Wages of barbers per month =    $6,900 ($1,380 * 5)
Manager's allowance per month = $535
Advertising per month =                 $270
Rent per month =                           $1,010 
Utilities per month =                        $160
Magazines per month =                   $35 
Total fixed costs per month =     $8,910
Ivanhoe currently charges $11 per haircut.
Variable costs per haircut:
Commission per haircut =       $3.75
Barber supplies per haircut = $0.50 
Utilities per haircut =                $0.15
Total variable costs per unit   $4.40
Contribution margin per haircut = $6.60 ($11 - $4.40)
Contribution margin ratio = 0.6
Break-even point in units = $8,910/$6.60 = 1,350
Break-even point in sales dollars = $8,910/0.6 = $14,850
Net income assuming 1,670 haircuts for a month:
Sales revenue = $18,370 ($11 * 1,670)
Variable costs =     7,340 ($4.40 * 1,670)
Contribution       $11,030
Fixed costs            8,910
Net income         $2,120