As the new manager of a local fitness club, Just-for-You Fitness, you have been studying the club's financial data. You would like to determine how the club's costs behave in order to make accurate predictions from the last six months r next year. Here is information EEB (Click the icon view the information.) Read the requirements. mixed? Explain your answer. Requirement 1. By looking at the Total Operating Costs and the Average Operating Costs per Member, can you telll whether the club's operating costs are variable, fixed, By looking at "Total Operating Costs," we can see that the club's operating costs are not purely fixed; otherwise, total costs would remain constant ylooking at the Operating Costs per Member," we can see that the operating costs are not purely variable; otherwise, the "per-member cost would remain constant Therefore, the club's operating costs are mixed. Requirement 2. Use the high-low method to determine the club's monthly operating cost equation f the mixed cost line). (Round your answer to the nearest cent.) First, determine the formula and calculate the variable cost per unit (the slope =Variable cost per unit Change in total operating costs Change in volume 1,885 130 S 4.50 Next, let's determine the formula and calculate the fixed cost component using the highest volume of activity. (Round your answers the nearest whole dollar.) Total operating costs Total variable costs Total fixed costs 1. By looking at the Total Operating Costs and the Average Operating Costs per Member, can you tell whether the club's operating costs are variable, fixed, or mixed? Explain your answer. Use the high-low method to determine the club's monthly operating cost equation. 2. 3. Using your answer from Requirement 2, predict total monthly operating costs if the club has 580 members Can you predict total monthly operating costs if the club has 3,000 members? Explain 4. your answer. 5. Prepare the club's traditional income statement and its contribution margin income statement for the month of July. Assume that your cost equation from Requirement 2 accurately describes the club's cost behavior. The club charges members $42 per month for unlimited access to its facilities. 6. Perform regression analysis using Microsoft Excel. What is the monthly operating cost equation? What is the R-square? Why is the cost equation different from that in Requirement 2? Drint Dono Total Club Membership Average Operating (number of members) Operating Costs Month Costs per Member $ July 410 9,200 $ 22.44 August 450 $ 9,800 21.78 $ 10,500 September. 530 $ 19.81 $ 10,600 October 460 $ 23.04 $ 11,085 November 540 $ 20.53 $ 10,100 December 510 19.80 Print Done CA CA
