Read the case study and addressing the following:

Part 1, Sections 1-2: Provide calculations and a solution for total variable costs, break even in sales volume (number of members), break even in sales (in dollars), and margin of safety.

Case Study:

n 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 = $30.

Costs:

-General fixed operating expenses = $4,100 per month.

-Equipment Lease = $395 per month.

-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 330 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 $13,750 for the month? What is the margin of safety in dollars? Show your work and all calculations.