Anytime Fitness Analysis

Topics: Variable cost, Costs, Management accounting Pages: 1 (379 words) Published: July 30, 2013
Anytime Fitness Analysis Paper

Anytime Fitness Analysis Paper
Knowing the different costs that go along with a company are vital to operating and sustaining it. According to the information provided, Snap Fitness will have an estimated fixed cost of $4,000 for operating expenses and approximately $2,000 for leasing the gym equipment (Kimmel, 2009). The information also provides that Snap Fitness will need 300 members to provide service to for a break-even point (Kimmel, 2009). There will be a $26 dollar membership fee for each member per month. The break-even cost is calculated by the membership fee of $26 by 300 members will yield $7,800 for a break-even cost. With this information, Snap Fitness will need to collect the $7,800 before the company will turn a profit. After knowing the break-even point, the company can calculate the variable costs. There is variable costs formula that breaks down by sales equals variable costs plus fixed costs plus net income. The break-even point is when the net income is equaled to zero (Kimmel, 2009). Since the value of the variable cost is in question the formula can be written by where variable costs equals $7,800 minus $6,000 minus $0. This formula yields a $1,800 variable cost for Snap Fitness. The monthly sales in members and dollars for Snap Fitness’s with a target net income of $10,000 for the month will need the following formula/analysis; all aspects will be separated into the cost per unit. During our break even analysis we derived that the variable costs are at $1,800 and we divide this number by the number of members totaling 300 equals six dollars per unit. The sales was noted to be $26 per unit with a contribution margin of $20 a unit according to the formula Contribution Margin equals Sales minus Variable Costs. The required sales in units for $10,000 in net income, we will add the goal income to the fixed costs then divide by the contribution margin. So $10,000 plus $6000 divided by...
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