Hairdressing Unit 2- Revision

Please watch this videoWrite down all the costs you can think of

when running a barber shop.

http://barberconnect.co.uk (video on homepage)

What is a cost?http://www.salonsdirect.com

What is a cost?

TASK- Imagine a new Hairdressers is going to open in Wickford

Please list the start-up costs and Running costs this hairdresser may have.

Start-up costs Running costs

• Electricity bills• Shelving and shop fittings,• Staff wages • Cleaning materials, • A sign for the shop• Hairdryers• Clippers• Gel .

What is Revenue?

Discuss; What ways do Hairdressers earn revenue? What items do they sell?

Which of the below is revenue for a Hairdresser?   Staff wagesAdvertising Cutting clients hair

Task- Are the items fixed or variable costs?

Item Fixed Costs (Does not changed based on how you produce)

Variable Costs (Changes based on how much you produce)

RentShampooBarber ChairsStaff wages Razor Blades

Rent

Shampoo Staff wages

Razor Blades

Barber Chairs

Electricity

Task

400 clients

Variable Costs £Fixed Costs £Total Costs £

Super Cutz various clients hair in their shops. Below are the estimated monthly costs if they cut 400 clients hair.  Total fixed costs = £100,000Variable costs = £1 per haircut a) Work out the fixed costs, variable costs and total costs below

TASK- Supercutz cut clients hair through a walk in service. The price of a haircut £12. The business has cut 850 clients hair last

month. Work out the total revenue Supercutz receive from cutting hair?

Show your workings

£

 Type in your answer in the box

TASK- Give the correct formula for calculating profit. Please drag and drop the correct items into the formula.

Revenue Number of Sales Inflows

Variable Costs Fixed Costs Expenditure

Profit

Match the keywords to the definitionsTotal costs =

Revenue =

Profit =

Gross profit =

Net profit =

Cash inflows are often called…Cash outflows are often called…

fixed costs + variable costs

number of sales x price per

unit

revenue –

expenditure

revenue – cost of

sales

gross profit –

expenditure

receiptsPayments

TASK – complete the Profit and Loss account below.This is based on Supercutz in Basildon

COSTS REVENUES

£ £

Income from Sales 

Cost of Sales  

Gross Profit  

Expenses

Salaries  

Rent  

Net Profit  

Revenue is £10,000 per month from cutting hair and selling hair products

Cost of sales (directly linked to cutting hair) is £1000 per month

Salaries are £2,500 per month

Rent is £2,400 per month

What is the difference between Gross Profit and Net Profit?

Identify two ways Hairdresser can improve its Net Profit in 2012?

Please type your answers

What is breakeven?

Add the items onto the graph correctlyLabel the diagram below. Drag and drop all

items. Please put the on the breakeven point

Profit

Total Revenue

Margin of safety

Loss

Fixed Costs

Variable costs

Add the items onto the graph correctlyLabel the diagram below. Drag and drop all

items. Please put the on the breakeven point

Profit

Total Revenue

Margin of safety

Loss Fixed Costs

Variable costs

Task- How many units do I need to sell to breakeven?

Add the items onto the graph correctlyLabel the diagram below. Drag and drop all

items. Please put the on the breakeven point

Profit

Total Revenue

Margin of safety

Loss Fixed Costs

Variable costs

TASK-What is the total revenue if the business sells 1000 units?

Task How many Haircuts would Supercutz

need to cut to breakeven? (cover costs)

£Selling Price £10Variable cost per Unit 50pFixed Costs £100,000

Type your answer in the box

Why is it important for Supercutz to know their Break-even point?

Breakeven is important because

Importance of Breakeven analysis to business when planning success

It is needed to identify and track costs (both fixed and variable costs)

• It can help businesses identify where they can change their costs, for example, buying cheaper materials or finding a cheaper supplier

It is needed to highlight the margin of safety

CASHFLOW FORECASTING TASK- Which of the items above are cash

inflows? Please drag and drop them below

Share Capital

Staff wages Haircuts

Monthly rent

Telephone bill

L'Oreal shampoo sales

Which of the items above are cash inflows? Please drag and drop them below

Electricity bill

Please work complete the cashflow table below 2012.2013 January (£)

February (£)

March (£)

Total Receipts

120,000 125,000 115,000

Total Payments

90,000 130,000 50,000

Net inflow/outflow

Receipts- payments30,000

Opening Balance

150,000 Closing balance of January180,000

Closing Balance

180,000 Add net cashflow to your closing balance)

BUDGETING

Why is it important that a hairdresser budgets?

Considers its ….

What items could a hairdresser own? (Asset)

Own for a short long amount of time? (Long term liabilities)

Own (ASSET) for a short amount of time? (current asset)

Who could a hairdresser owe money to? (Liability)

Own for a short long amount of time?

Own for a short amount of time?

Balance sheetWhat items could a Barber own?ASSETS

LIABILITIES

- What the business OWNS to others including current liabilities and long term liabilities

-What the business OWES to others including current liabilities and long term liabilities

Balance sheet ADD in TASK