Recall that CHC expects total expenses of $142,000 (operating expenses $138,000 and interest expenses $4,000) in the first year. It will set its membership fee at $500 and expects to attract 300 members in its first year. Determine the number of memberships at which CHC will break even under the following conditions:
a) Under prevailing conditions in which the expected total operating expenses are $138,000.
b) Operating expenses are $146,000 and interest expenses are $4,000.
c) Operating expenses are $142,000 and interest expenses are $4,000.
d) Explain the relationship between the total expenses and the break-even level of memberships. How would the break-even level be affected if Sue had rented a smaller facility for her health club? What would be a disadvantage of a smaller facility.