Beauty Business Financial Management and Pricing 2

Question 1

A salon owner wants to know how much profit remains after covering all operating expenses. Which figure should she look at?

Accepted Answer

Net profit

Answer

Gross revenue

Answer

Total sales

Answer

Service ticket average

Question 2

If a haircut costs $18 in product, labor, and overhead and is priced at $45, what is the gross profit margin per service?

Accepted Answer

60%

Answer

40%

Answer

50%

Answer

70%

Question 3

What is the primary purpose of a break-even analysis for a new salon?

Accepted Answer

To determine the sales needed to cover all costs

Answer

To set employee schedules

Answer

To calculate tips

Answer

To choose retail brands

Question 4

Rent, insurance, and salaried staff are examples of what type of cost?

Accepted Answer

Fixed costs

Answer

Variable costs

Answer

Marginal costs

Answer

Discretionary costs

Question 5

A booth renter pays a weekly flat fee to the salon owner. This income for the owner is best classified as:

Accepted Answer

Rental income

Answer

Service revenue

Answer

Retail sales

Answer

Commission

Question 6

Which pricing strategy sets service prices based on what competitors in the area charge?

Accepted Answer

Competitive pricing

Answer

Cost-plus pricing

Answer

Value-based pricing

Answer

Penetration pricing

Question 7

Why should a salon track its average service ticket over time?

Accepted Answer

To measure revenue per client visit and spot growth opportunities

Answer

To calculate sales tax owed

Answer

To schedule cleaning

Answer

To order more towels