BYP20-9 Quiz

BYP20-9

Information Given Sales Price: 26 Fixed Costs (FC): $4,000 VC: 7.8 Equipment Lease: $1460 CM: 18.2 $5460 Contribution Margin Ratio: 18.2/26= Members needed to Breakeven: 300 70% Monthly Membership Fee: $26

Part A:
Amount of Variable Costs (VC) Required Sales – Variable Costs – Fixed Costs = Net Income 26(300) – VC(300) – 5460=0 7800 – 300VC – 5460=0 2340 = 300VC 7.8 = VC per Unit Variable Costs: 2340
Part B: What are the monthly sales in members and dollars with a target net income of $3640? Required sales in units = (Fixed Costs + Target Net Income)/Contribution Margin per Unit Required sales in dollars = (FC+TNI)/CM Ratio (5460+3640)/18.2 = 500 Memberships (5460+3640)/.70 = $13,000 in Sales

Part C: Five Examples of Variable Costs for a fitness center: 1. Utilities 2. Repairs/Maintenance 3. Labor Hours 4. Machine Setups 5. Toiletries (Towels, supplies, etc.)

Part D:
The total investment costs range from $108,000 to $258,500. This cost covers training, site selection assistance, promotional activities and continued support for growth and success. Snap fitness offers 24 hour access 7 days a week, with personal trainers available to lead one-on-one sessions or mini group classes (boot camps). In all, if you have the available finances to cover the start-up costs, Snap Fitness is a great opportunity to become your own boss. The company has put in place many different tools to help the franchisee succeed and continue to