CHS Business Management 2 — Questions and Answers
Question 1: A salon owner wants to evaluate staff performance. Which metric best measures a stylist's contribution to salon revenue?
- Number of social media followers
- Service revenue generated per hour (Correct answer)
- Number of client complaints filed
- Years of experience in the field
Correct answer: Service revenue generated per hour
Service revenue per hour measures how effectively a stylist converts their time into income for the salon.
Question 2: What does 'booth rental' mean in a salon business context?
- Renting a styling chair or station from the salon owner as an independent contractor (Correct answer)
- Leasing retail display space to sell products
- Renting the entire salon for a special event
- A temporary workstation provided during busy seasons
Correct answer: Renting a styling chair or station from the salon owner as an independent contractor
Booth rental is an arrangement where a stylist pays the salon owner a flat fee or percentage for use of a station while operating as an independent contractor.
Question 3: Which strategy is most effective for reducing no-show appointment rates?
- Offering walk-in services only
- Sending automated appointment reminders via text or email (Correct answer)
- Removing the online booking option
- Charging higher prices to deter casual bookings
Correct answer: Sending automated appointment reminders via text or email
Automated reminders prompt clients to confirm or cancel in advance, significantly reducing no-shows.
Question 4: A salon's 'cost of goods sold' (COGS) primarily refers to what?
- Employee wages and benefits
- Monthly rent and utility bills
- The direct cost of products and materials used to deliver services (Correct answer)
- Marketing and advertising expenses
Correct answer: The direct cost of products and materials used to deliver services
COGS in a salon represents the cost of hair color, chemicals, and retail products directly consumed in providing services.
Question 5: When setting retail product prices, what does the term 'keystone markup' mean?
- Marking up the wholesale price by 100% to set the retail price (Correct answer)
- Pricing products 10% above competitor rates
- Setting prices based solely on customer demand
- Charging the same price the distributor charges
Correct answer: Marking up the wholesale price by 100% to set the retail price
Keystone markup doubles the wholesale cost, so a product bought for $10 sells for $20, providing a 50% gross margin.
Question 6: What is the primary purpose of a salon's employee handbook?
- To list all client contact information
- To document policies, expectations, and procedures for staff (Correct answer)
- To track monthly product inventory levels
- To record daily appointment schedules
Correct answer: To document policies, expectations, and procedures for staff
An employee handbook communicates workplace policies, dress codes, scheduling rules, and conduct expectations to all staff.
Question 7: Which financial document shows a salon's revenues, expenses, and net profit over a specific time period?
- Balance sheet
- Cash flow statement
- Income statement (profit and loss statement) (Correct answer)
- Accounts receivable ledger
Correct answer: Income statement (profit and loss statement)
The income statement summarizes all revenue earned and expenses incurred during a period, revealing the net profit or loss.
CHS Business Management 2
A salon owner wants to evaluate staff performance.
Which metric best measures a stylist's contribution to salon revenue?