Hairdressing Unit 2- Revision

Please watch this video Write down all the costs you can think of when running a barber shop. (video on homepage)

What is a cost?

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 costsRunning 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 wages Advertising 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) Rent Shampoo Barber Chairs Staff 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 = £100,000 Variable 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 definitions Total 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 receipts Payments

TASK – complete the Profit and Loss account below. This is based on Supercutz in Basildon COSTSREVENUES ££ 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 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 correctly Label 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 correctly Label 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 correctly Label 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£10 Variable cost per Unit50p Fixed 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 January (£)February (£)March (£) Total Receipts120,000125,000115,000 Total Payments90,000130,00050,000 Net inflow/outfl ow Receipts- payments 30,000 Opening Balance 150,000Closing balance of January 180,000 Closing Balance 180,000Add 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 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