Beauty Business Salon Financial Management 2

Question 1

A salon owner wants to know the minimum revenue needed to cover all costs without profit or loss. What is this figure called?

Accepted Answer

Break-even point

Answer

The break-even point is the sales level where total revenue exactly equals total costs.

Question 2

Which cost stays the same each month regardless of how many clients the salon serves?

Accepted Answer

Salon rent

Answer

Rent is a fixed cost that does not change with client volume.

Question 3

A service priced at $80 uses $12 in product. What is the service cost of goods percentage?

Accepted Answer

15%

Answer

$12 divided by $80 equals 15%.

Question 4

What does 'net profit' represent on a salon income statement?

Accepted Answer

Revenue remaining after all expenses and taxes

Answer

Net profit is what remains after every expense, including taxes, is subtracted from revenue.

Question 5

A commonly recommended target keeps total payroll (including owner) at what share of salon revenue?

Accepted Answer

Around 35-50%

Answer

Keeping payroll near 35-50% of revenue is a widely used benchmark for salon profitability.

Beauty Business Practice Test