QUESTION ONE Lion Rock Fitness Club plans to arrange fitness courses for their members. This activity is expected to attain new members. The result is expected as follows:- S 200,000 Sales of 100 fitness courses Equipment rental (fixed) Variable administration overheads ($100 per course) Rooms booking fee (fixed) Course fee to tutors ($900 per course) Other fixed selling overheads Net profit 10,000 10,000 30,000 90,000 9,000 149,000 51,000 Required a) Calculate the contribution amount per course. (4 marks) b) Compute the breakeven level in term of the number of courses and sales value. What is the implication of this breakeven level? (10 marks) c) As less members joined the courses in the past few years, the Club plans to re- organize the classes with the following estimation: Reduce course fee by 10% Numbers of courses are expected to increase by 10%. Room booking fee is expected to increase by 10%. Variable administration overheads per course will be decreased by 10% Other costs are unchanged. Based on the above information, you are required to compute the overall net profit. (16 marks) Appendix Present value IPVI of one dollar Annual interest rate () at % 10% 11% 128 1 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 2 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 3 0.840 0.816 0.794 0.751 0.864 0.823 0.772 0.708 0.731 0.659 0.712 0.636 4 0.792 0.763 0.735 0.683 5 0.784 0.747 0.681 0.621 0.593 0.567 0.713 0.666 0.650 0.596 0.746 0.705 0.630 0.564 0.535 0.507 7 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 8 0.677 0.627 0.582 0.540 0.502 0.467 0.434 0.404 9 0.645 0.592 0.544 0.500 0.460 0.424 0.391 0.361 10 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 Annual interest rate ) at 13% 15% 16% 17% 19% 20% 1 0.885 0.877 0.870 0.862 0.847 0.840 0.855 0.731 0.833 0.694 2 0.783 0.769 0.756 0.743 0.718 0.706 3 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 4 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 5 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 6 0.480 0.387 0.371 0.460 0.407 0.421 0.373 0.440 0.389 0.345 0.404 0.357 0.356 0.315 7 0.425 0.342 0.328 8 0.376 0.360 0.330 0.316 0.303 0.290 0.279 9 0.333 0.319 0.305 0.292 0.280 0.268 0.257 0.246 10 0.295 0.282 0.270 0.258 0.248 0.237 0.227 0.218 Present value 1 where is annual interest rate n = number of periods = n **** End of the Paper ****