Many of you will some day own your own business. One rapidly growing opportunity is no$-$frills workout centers.Such centers attract customers who want to take advantage of state$-$of$-$the$-$art fitness equipment but do not need the other amenities of full$-$service health clubs. One way to own your own fitness business is to buy a franchise.Snap Fitness is a Minnesota$-$based business that offers franchise opportunities. For a very low monthly fee $($$$26,$ without an annual contract$),$ customers can access a Snap Fitness center $24$ hours a day.The Snap Fitness website $($www$.$snapfitness.com$)$ indicates that start$-$up costs range from $$60,000$ to $$184,000.$This initial investment covers the following pre$-$opening costs: franchise fee, grand opening marketing, leasehold improvements, utility$/$rent deposits, and training.Suppose that Snap Fitness estimates that each location incurs $$4,000$ per month in fixed operating expenses plus $$1,460$ to lease equipment. A recent newspaper article describing no$-$frills fitness centers indicated that a Snap Fitness site might require only $300$ members to break even. Using the information provided above and your knowledge of CVP analysis, estimate the amount of variable costs. $($When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses and the equipment lease.$)$Variable costs $($in total$)$:$$2,340$Using the information from previous part, what would monthly sales in members and dollars have to be to achieve a target net income of $$3,640$ for the month?Find the:Required sales in units Required sales in dollars

Many of you will some day own your own business. One rapidly growing opportunity is no$-$frills workout centers. Such centers attract customers who want to take advantage of state$-$of$-$the$-$art fitness equipment but do not need the other amenities of full$-$service health clubs. One way to own your own fitness business is to buy a franchise. Snap Fitness is a Minnesota$-$based business that offers franchise opportunities. For a very low monthly fee $($$$26,$ without an annual contract$),$ customers can access a Snap Fitness center $24$ hours a day.

The Snap Fitness website $($

www$.$snapfitness.com$)$ indicates that start$-$up costs range from $$60,000$ to $$184,000.$ This initial investment covers the following pre$-$opening costs: franchise fee, grand opening marketing, leasehold improvements, utility$/$rent deposits, and training.

$($a$)$

Your Answer

Correct Answer $($Used$,-30\%)$

Your answer is correct.

Suppose that Snap Fitness estimates that each location incurs $$4,000$ per month in fixed operating expenses plus $$1,460$ to lease equipment. A recent newspaper article describing no$-$frills fitness centers indicated that a Snap Fitness site might require only $300$ members to break even. Using the information provided above and your knowledge of CVP analysis, estimate the amount of variable costs. $($When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses and the equipment lease.$)$

Variable costs $($in total$)$ $

$($b$)$

Your Answer

Correct Answer

Your answer is incorrect.

Using the information from previous part, what would monthly sales in members and dollars have to be to achieve a target net income of $$3,640$ for the month?

Required Sales in Units

memberships

Required Sales in Dollars

$

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Solution

Attempts: $1$ of $3$ used