EAGLE SOAR FITNESS (ESF) is located on the campus of North Carolina Central University in Durham, NC. You have recently been hired to serve as the Assistant Director. One of your first projects is to examine our employment costs. Currently we are open from 7:00 a.m. to 10:00 p.m. Monday through Saturday each week.

However, students have submitted a petition to expand the hours of operation to 5:00 a.m. to 1:00 a.m. seven days a week. The management of ESF feels this would be great as long as students utilize the facilities but they also think this drastic increase in hours could be cost prohibitive.

During peak times (10:00 a.m. to 12:00 p.m., 3:00 p.m. to 6:00 p.m. and 8:00 p.m. to 10:00 p.m.) labor costs are $100 per hour. While during all other times costs average $60 per hour. The management team does not anticipate any additional peak times if they increase hours.

In addition to the students proposed schedule change above, ESF's management team also would like to examine the costs of being open 6:00 a.m. to 12:00 a.m. Monday through Friday and 10:00 a.m. to 12:00 a.m. Saturday and Sunday. The management team thinks students might like these hours as well depending on the costs.

Your manager would like for you to answer the following questions.

QUESTIONS

1. What are the current average monthly labor costs?

2. What would be the average monthly labor costs under the students proposed plan?

3. What would be the average monthly labor costs under the staff proposed plan?

4. Are labor costs variable or fixed costs? Briefly explain your answer.