Hairdressing Unit 2- Revision

Please watch this video

 Write 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.

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

Start-up costs Running costs

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 wages Advertising Cutting clients hair

Task costs?

Are the items fixed or variable Rent Razor Blades Barber Chairs Electricity

Item

Rent Shampoo Barber Chairs Staff wages Razor Blades Shampoo Staff wages

Fixed Costs (Does not changed based on how you produce) Variable Costs (Changes based on how much you produce)

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

400 clients

£ £ £

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?

Type in your answer in the box £ Show your workings

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

Revenue Number of Sales Inflows Fixed Costs Expenditure Variable Costs Profit

Match the keywords to the definitions  Total costs =  Revenue = revenue – expenditure number of sales x price per unit  Profit = Payments receipts  Gross profit =    Net profit =

gross profit – expenditure

Cash inflows are often called… Cash outflows are often called… fixed costs + variable costs

revenue – cost of sales

TASK – complete the Profit and Loss account below.

This is based on Supercutz in Basildon

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

Income from Sales Cost of Sales

Gross Profit

Expenses

Salaries Rent

Net Profit COSTS £ REVENUES £



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 correctly  Label the diagram below. Drag and drop all items. Please put the on the breakeven point Loss Fixed Costs Profit Variable costs Margin of safety Total Revenue

Add the items onto the graph correctly  Label the diagram below. Drag and drop all items. Please put the on the breakeven point Total Revenue Profit Variable costs Loss Fixed Costs Margin of safety Task- How many units do I need to sell to breakeven?

Add the items onto the graph correctly  Label the diagram below. Drag and drop all items. Please put the on the breakeven point Total Revenue Profit Variable costs Loss Fixed Costs Margin of safety 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 Variable cost per Unit Fixed Costs

£

£10 50p £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 is needed to highlight the margin of safety • It can help businesses identify where they can change their costs, for example, buying cheaper materials or finding a cheaper supplier

CASHFLOW FORECASTING

TASK-

Which of the items above are cash inflows? Please drag and drop them below Electricity bill Monthly rent Haircuts Staff wages L'Oreal shampoo sales Telephone bill Share Capital

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

2013

Please work complete the cashflow table below 2012.

January (£) February (£) March (£)

Total Receipts 120,000 Total Payments 90,000

Net inflow/outfl ow Opening Balance

Receipts payments 30,000

150,000

Closing Balance 180,000 125,000 130,000 Closing balance of January 180,000

Add net cashflow your closing balance) to

115,000 50,000

BUDGETING  Why is it important that a hairdresser budgets?

 Considers its ….

What items could a hairdresser own? (Asset)  Own (ASSET) for a short amount of time? (current asset)  Own for a short long amount of time? (Long term liabilities)

Who could a hairdresser owe money to? (Liability)  Own for a short amount of time?

 Own for a short long amount of time?

Balance sheet What 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