Assignment
Section 1: Suppose that Snap Fitness estimates that each location incurs $5,000 per month in general fixed operating expenses and $1,000 to lease equipment. Mixed costs are equal to $500 per/month (fixed) plus $1 per membership sale (variable). Total variable costs were not provided. A recent newspaper article describing no-frills fitness centers indicated that a Snap Fitness site might require only 320 members to break even. Members pay on a monthly basis. Using the information provided above, and your knowledge of CVP analysis, estimate the amount of variable costs. (When performing your analysis, assume that fixed costs include estimated monthly operating expenses, equipment lease and the fixed part of mixed costs.)
Section 2: Using the information from part 1, section 1, what would monthly sales in members and dollars have to be to achieve a target net income of $15,000 for the month?
Section 3: Provide several examples of variable costs and fixed costs for a fitness center. Discuss how a fitness center's cost structure, relevant range, margin of safety, cost behaviors, and CVP apply to the case study. How do you plan to use this in order to manage the business and plan for profitability? What type of internal accounting reports would you like to review in order to help you make informed decisions?
Section 4: Go to a competitor's internet site (Curves, Snap Fitness, or Anytime Fitness ) and find information about purchasing their franchise. Summarize the pertinent information required to make an informed investment decision. Which franchise do you believe is a better business opportunity? Explain your answer.
Attachment:- Snap-Fitness-Assignment.rar