CVP and Break-Even Analysis
ACC/561 - Accounting Wk 5
August 29, 2011
Snap Fitness
Snap Fitness, a fitness business based in Minnesota, offers franchise opportunities. The opportunity comes with a start-up fee ranging from $60,000 to $184,000. The following items are included in the start-up fee: 1. Franchise Fee 2. Grand Opening Marketing 3. Leasehold Improvements 4. Utility and Rent Deposits 5. Training Many people dream of owning a business as opposed to working for another business. The benefits of owning a franchise is priceless if ran properly. This paper will show an estimate amount of variable costs and monthly sales in members and dollars for Snap Fitness. Also included are five examples of variable
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A more difficult task is identify and planning for variable costs. Variable costs can change from month to month and sometimes cannot be planned for. For a fitness center or health club, the biggest and most ongoing variable cost to think of is maintenance and repair of the equipment. To maintain quality, of the fitness equipment must be kept in prime condition at all times. Although monthly and routine checks of the equipment may be part of an employee’s responsibilities, replacing or repairing damaged equipment could be a cost that varies greatly from month to month. One way to try to reduce or manage this variable cost is to ensure equipment is inspected regularly and problems are being addressed while they are still small. Another variable cost to consider is continuing education and training for employees. Like any business, it is important for those in the health and fitness field to stay on top of current trends in the industry. From time to time it may be beneficial and necessary for full-time employees to attend seminars or training sessions to expand their knowledge in the industry. This is a good example of a cost that would not be incurred on a regular basis, but should be budgeted for at least once a quarter. Two variable costs that organizations overlook are office supplies and fuel. In every organization employees use office supplies. In many organizations fuel is needed for
Martin Menard and Mirella Craciun currently work as personal trainers out of Body Worx, a personal training facility in London, Ontario. Menard and Craciun are interested in leaving Body Worx and opening their own facility – Elite Personal Training (Elite). Both trainers are certified by the Canadian Association of Fitness Professionals which will allow them to charge a higher price, as some competing trainers do not have this qualification.
I really enjoyed this article, as it went into effective financial planning. The 2 major categories of cost are total charges (the patient's bill) and the cost of providing services. These 2 costs can be defined mathematically in the following indices: average revenue per patient day and the cost per patient day.
An Analysis of the U.S. Health Club Industry in 2004 and the Role of Bally Total Fitness
A fitness center or health clubs greatest variable cost is maintenance and equipment repair. Keeping
The health club industry has continued to see an increase in the amount of health clubs/fitness centers. Since 1992, the United States has seen the number of health clubs increased by almost 40 percent, from 12,635 to 17,531 facilities. It has also seen an increase in membership by almost 60 percent, from 20.8 million to 32.8 million. What this all means for Fun 4 Life Fitness Center, LLC is that the market is ever growing which translates to more competition. Most fitness centers offer a variety of services to address the needs and convenience of the customers. Some of these services includes personal trainers, facilities with state-of-the-art equipment, and programs that cater to mostly every demographic.
Snap Fitness is a worldwide health company that franchises their name. The mission statement follows
I really enjoyed reading your post on licenses and franchises. I have not had much experience with licenses but have with franchises. During high school and college, I worked at a franchise called Curves for Women. This was originally started as a women’s only gym out of Waco, TX. Gary Heavin the founder decided to make it a franchise. You started to see Curves pop up everywhere being it was a woman only gym, 30-minute workout, and three days a week. It had a lot of selling points to make business managers want to take part in this adventure. I worked with Curves for 7 years. An article by Obesity, Fitness, & Wellness Week talks about how Curves was going in the oddest places. The small towns were a target for them. At the time,
Repairs and modernization costs are usually services purchased by fitness clubs to provide repairs on existing equipment or installation of new equipment from trained technicians. Additionally, fitness owners have insurance to pay for some of these variable expenses according to the amount and types of equipment.
Valley CrossFit will be providing a group training service with future plans to expand into merchandising and supplement sales. Initial start-up costs will include $1000 to become CrossFit Level 1 Certified or a ‘coach’ and a $3000 affiliation fee. This will give Valley CrossFit access to the CrossFit name and brand for marketing purposes. Once approved, I will then have to create a website that is approved by CrossFit headquarters. The other major
A variable cost is a corporate expense that varies with production output. Variable costs are those costs that vary depending on a company's production volume; they rise as production increases and fall as production decreases (Variable Cost, n.d.); in the case study for all cost per event such
Variable costs are costs that vary with output. Variable cost changes according to the quantity of a good or service being produced. Generally variable costs increase at a constant rate relative to labor and capital. Variable costs may include wages, utilities, materials used in production, etc. The inputs of Listerine start with Raw Materials (generally composed of diluents, antibacterial agents, soaps, flavorings,
3 variable costs indentified, they are power, operations, material. They are proportional to the revenue intake.
The essential relationship between fixed and variable costs is the same whether the budget is static or flexible. The key is that in the flexible budget, both fixed and variable costs are subject to change. In most cases,
■ Purchasing a long-lived asset or entering a long-term contract (buildings and equipment, either purchased or leased).
There are different costs that respond to the different activities like variable costs are directly associated with the products sold. The cost behavior patterns of selling, general, administrative, and other operating expenses are determined, and these expenses are budgeted accordingly. For example, sales commissions will be a function of the forecast of either sales dollars or units. The historical pattern of some expenses will be affected by changes in strategy that management may plan for the budget period. In a participative budgeting system, the manager of each department or cost responsibility center will submit the anticipated cost of the department 's planned activities, along with descriptions of the activities and explanations of significant differences from past experience. After review by higher levels of management, and perhaps negotiation, a final budget will be established. Because of the necessity to recognize cost behavior patterns for planning and control purposes, overhead costs will be classified as variable or fixed.