Fixed and Variable Costs

You have been appointed as the costing manager of a large health club having a membership of around 20002500 members. The club provides personal trainers for its members on request as an add-on facility. The club pays a small salary to the hired personal trainers as remuneration. In addition to this, these trainers are paid commission for each lesson to the members. Additionally, the club has a swimming pool and contracts instructors for swimming classes. Your club also has a fruit juice bar that sells a few lunch items, such as sandwiches.

Consider the given scenario and discuss the following:

• How will you evaluate the fixed costs of the health club?
• How will you arrive at the total variable costs the club incurs?
• Do you agree that only variable costs incurred in your health club can be termed as its differential costs? Explain using a practical example.
• What are the three most essential steps you should follow as the club's costing manager for assignment of indirect costs or cost allocation?
• How does your decision relate directly to a Christ-Centered Worldview of cost?