Jill is currently doing an average weekly business of 16 hair cuts, 7 permanents, and 4 brief visits, which take half an hour, an hour, and fifteen minutes, respectively. The hair salon is currently allocated rent of $250 per month and other upkeep expenses of $50 a month. Thompson is paid $12 per hour, and she earned $768 last month.
a. Prepare a monthly income statement and determine the total contribution margin and total product margin for each service line. Determine net income for the service taken as a whole.
b. How would you advise Jones: Should he close the hair salon? Why or why not?
c. Should Jones try to persuade Thompson to drop any service she now offers?