Beauty Business Salon Financial Management 3 — Questions and Answers
Question 1: A stylist on 45% commission books $2,000 in services in a week. What is her commission pay?
- $450
- $900 (Correct answer)
- $1,100
- $2,000
Correct answer: $900
45% of $2,000 equals $900.
Question 2: What is the primary purpose of a salon budget?
- To eliminate all expenses
- To plan and control income and spending (Correct answer)
- To increase taxes owed
- To set client appointment times
Correct answer: To plan and control income and spending
A budget helps forecast revenue and manage expenses to stay profitable.
Question 3: Which metric shows the average amount a client spends per visit?
- Average ticket (Correct answer)
- Retention rate
- Break-even point
- Gross margin
Correct answer: Average ticket
Average ticket is total sales divided by the number of client visits.
Question 4: A salon buys product at $5 and sells it for $15 retail. What is the markup?
- 100%
- 150%
- 200% (Correct answer)
- 300%
Correct answer: 200%
The $10 markup over the $5 cost is 200% of cost.
Question 5: Why is an emergency cash reserve important for a salon?
- To avoid paying taxes
- To cover unexpected expenses or slow periods (Correct answer)
- To increase commission rates
- To reduce retail inventory
Correct answer: To cover unexpected expenses or slow periods
A reserve protects the business during slow seasons or surprise costs.
Question 6: What does 'overhead' refer to in salon finances?
- Ongoing operating costs not tied to a single service (Correct answer)
- Only the cost of hair color
- Tips earned by stylists
- The salon's total revenue
Correct answer: Ongoing operating costs not tied to a single service
Overhead is the general cost of running the salon, such as rent, utilities, and insurance.
Question 7: How is gross profit calculated for a salon?
- Revenue minus cost of goods sold (Correct answer)
- Revenue minus all taxes
- Total tips plus retail sales
- Revenue plus operating expenses
Correct answer: Revenue minus cost of goods sold
Gross profit equals revenue less the direct cost of goods sold.
Beauty Business Salon Financial Management 3
A stylist on 45% commission books $2,000 in services in a week.
What is her commission pay?