Essay in Snap Health

Snap Exercise

Cost Volume Analysis is helpful to managers in decision-making activities just like setting rates, determining item mix, and maximizing the utilization of production features. (Kimmel, Weygandt, & Kieso, 2009) To begin with Cost Volume Analysis of your potential new Snap Fitness site, the following data has to be considered: (1) total fixed costs, (2) incremental changing costs, (3) monthly earnings per buyer, and (4) and ideal return on investment. Projected total month to month fixed costs are $6, 000 -- $4, 1000 in working expenses in addition $2, 000 in gear rental. The Snap Health monthly charge is $26 per consumer. It is considering the fact that the target net monthly cash flow is $12, 000. The incremental varying costs should be calculated. Using the information attained from the recent newspaper article, it was suggested that a Snap Fitness web page might require simply 300 associates to break also; hence, the resulting gradual variable cost could be dependant on using the pursuing formula:

Total break-even revenue = Total variable cost + Total Fixed Cost + Net gain.

twenty six x three hundred = 300x + 6000 +0 Fixing the formula results in $1, 800 of total monthly variable cost. Given the 300 users, a $6 monthly variable per customer is applicable. Having successfully computed variable costs, it is possible to project the consumer base essential to achieve a month to month net income of $10, 000. The following method can be used:

Needed sales= Changing Costs+ Fixed Costs + Net Income.

26x= 6x+ 6000 + twelve, 000

Resolving the equation results in a required consumer bottom of 800 members. Major monthly profits provided by 800 members would be $20, 800. The major monthly salary would be applied as follows: $4, 800 variable cost (800 members x 6), $6, 000 total fixed costs, and $10,50, 000 concentrate on net income. Contribution margin is " the amount of revenue leftover after deducting variable...



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