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Cenik.edu/ultra/courses/_145442 1/outline/assessment/_15400652_1/overview/attempt/ 9281374_1/conversations/.15 Type a response PROF Tom Myers 2/19/20, 12:14 PM Case Study: In addition to regular gyms, nontraditional workout concepts and centers such as Kosama are increasing in popularity. Kosama is a franchise opportunity that offers members the opportunity to improve their health and fitness level. To learn more about the company visit kosama.com. Part 1, Section 1: Assume the following revenue and cost break-down. Revenue: - Monthly membership fee = $28. Costs: -General fixed operating expenses = $3,975 per month. -Equipment Lease = $410 per month. -Towel service = $.50 per member based on volume. -Mixed costs are equal to $275 per/month (fixed) plus $1.10 per membership sale (variable). -Total variable costs are not known. -Estimated number of members required to break even is between 255 and 275 members per month. Using the information provided estimate the amount of variable costs. When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses, equipment lease and the fixed part of mixed costs. Show your work and all calculations. Part 1, Section 2: Using the information from section 1. What would monthly sales in members and dollars have to be to achieve a target net income of $14,500 for the month? What is the margin of safety in dollars? Show your work and all calculations. Reply x x A-D-A- = = 1 Normal 1 No Spac... Head Font Paragraph file that is temporarily stored on your computer. Save Case Study: In addition to regular gyms, nontraditional workout concepts and centers such as Kosama are increasing in popularity. Kesama is a franchise opportunity that offers members the Opportunity to improve their health and fitness level. To learn more about the company visit kosama.com Part 1, Section 1: Assume the following revenue and cost break-down. Revenue: -Monthly membership fee = $28. Costs: -General fixed operating expenses = $3,975 per month. -Equipment Lease = $410 per month. -Towel service = $.50 per member based on volume. -Mixed costs are equal to $275 per/month (fixed) plus $1.10 per membership sale (variable). -Total variable costs are not known. month. -Estimated number of members required to break even is between 255 and 275 members per Using the information provided estimate the amount of variable costs. When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses, equipment lease and the fixed part of mixed costs. Show your work and all calculations Part 1, Section 2: Using the information from section 1. What would monthly sales in members and dollars hays to be to achieve a target net income of $14.500 for the month? What is the margin of safety in dollars? Show your work and all calculations. Part 1, Section 3: Discuss how cost structure, relevant range, margin of safety, cost behaviors, and CVP apply to an investment in the franchise. How do you plan to use this in order to manage din Heading 4 Title Subtitle Suble till... LIHI313 CHILL Styles the business and plan for profitability? What type of internal accounting reports would you prepare? Why? Part 1, Section 4: Assume you decide to invest in the franchise. Provide a description and estimates in dollars for sales, variable and fixed expenses. Explain how you determined each number and provide a written list of assumptions. The following are additional explanations and resources. Part 1, Section 1: Use the following formula in order to determine total variable costs. Sales - Variable Costs - Fixed Costs - Net Income. Add the problem data to the formula and solve for the missing piece of the equation (i.e. variable costs).1. Membership sales is equal to sales volume times the price per member. 2. Total variable costs is not known. Enter X in the above formula. 3. Total fixed costs are provided with the problem. Enter fixed costs in the above formula. 4. Net income at the break even is equal to zero. Enter 0 in the above formula for net income. 5. Solve the equation. X = total variable costs. The above formula determines total variable costs at the break-even. Part 1, Section 2: Use the solution from part 1, section 1 (i.e. variable costs) in order to calculate the contribution margin (i.e. sales - variable costs) on a per unit (member) basis. In addition to fixed costs, add targeted net income equal to $14,500. Contribution Margin: Sales: membership sales times the price per member Minus Variable Costs: See solution in part 1, section 1. Equals: Contribution Margin in dollars Cenik.edu/ultra/courses/_145442 1/outline/assessment/_15400652_1/overview/attempt/ 9281374_1/conversations/.15 Type a response PROF Tom Myers 2/19/20, 12:14 PM Case Study: In addition to regular gyms, nontraditional workout concepts and centers such as Kosama are increasing in popularity. Kosama is a franchise opportunity that offers members the opportunity to improve their health and fitness level. To learn more about the company visit kosama.com. Part 1, Section 1: Assume the following revenue and cost break-down. Revenue: - Monthly membership fee = $28. Costs: -General fixed operating expenses = $3,975 per month. -Equipment Lease = $410 per month. -Towel service = $.50 per member based on volume. -Mixed costs are equal to $275 per/month (fixed) plus $1.10 per membership sale (variable). -Total variable costs are not known. -Estimated number of members required to break even is between 255 and 275 members per month. Using the information provided estimate the amount of variable costs. When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses, equipment lease and the fixed part of mixed costs. Show your work and all calculations. Part 1, Section 2: Using the information from section 1. What would monthly sales in members and dollars have to be to achieve a target net income of $14,500 for the month? What is the margin of safety in dollars? Show your work and all calculations. Reply x x A-D-A- = = 1 Normal 1 No Spac... Head Font Paragraph file that is temporarily stored on your computer. Save Case Study: In addition to regular gyms, nontraditional workout concepts and centers such as Kosama are increasing in popularity. Kesama is a franchise opportunity that offers members the Opportunity to improve their health and fitness level. To learn more about the company visit kosama.com Part 1, Section 1: Assume the following revenue and cost break-down. Revenue: -Monthly membership fee = $28. Costs: -General fixed operating expenses = $3,975 per month. -Equipment Lease = $410 per month. -Towel service = $.50 per member based on volume. -Mixed costs are equal to $275 per/month (fixed) plus $1.10 per membership sale (variable). -Total variable costs are not known. month. -Estimated number of members required to break even is between 255 and 275 members per Using the information provided estimate the amount of variable costs. When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses, equipment lease and the fixed part of mixed costs. Show your work and all calculations Part 1, Section 2: Using the information from section 1. What would monthly sales in members and dollars hays to be to achieve a target net income of $14.500 for the month? What is the margin of safety in dollars? Show your work and all calculations. Part 1, Section 3: Discuss how cost structure, relevant range, margin of safety, cost behaviors, and CVP apply to an investment in the franchise. How do you plan to use this in order to manage din Heading 4 Title Subtitle Suble till... LIHI313 CHILL Styles the business and plan for profitability? What type of internal accounting reports would you prepare? Why? Part 1, Section 4: Assume you decide to invest in the franchise. Provide a description and estimates in dollars for sales, variable and fixed expenses. Explain how you determined each number and provide a written list of assumptions. The following are additional explanations and resources. Part 1, Section 1: Use the following formula in order to determine total variable costs. Sales - Variable Costs - Fixed Costs - Net Income. Add the problem data to the formula and solve for the missing piece of the equation (i.e. variable costs).1. Membership sales is equal to sales volume times the price per member. 2. Total variable costs is not known. Enter X in the above formula. 3. Total fixed costs are provided with the problem. Enter fixed costs in the above formula. 4. Net income at the break even is equal to zero. Enter 0 in the above formula for net income. 5. Solve the equation. X = total variable costs. The above formula determines total variable costs at the break-even. Part 1, Section 2: Use the solution from part 1, section 1 (i.e. variable costs) in order to calculate the contribution margin (i.e. sales - variable costs) on a per unit (member) basis. In addition to fixed costs, add targeted net income equal to $14,500. Contribution Margin: Sales: membership sales times the price per member Minus Variable Costs: See solution in part 1, section 1. Equals: Contribution Margin in dollars