Sabrri Spa offers a variety of skin treatments and spa services, including massages, facials, body treatments, and manicures. The spa is owned by the largest dermatology practice in town, and the doctors invested $450,000 to start the spa five years ago. The spa is in its own building next to the clinic, and it has its own staff and management, so almost all of the spa's costs are direct costs.

The average one-hour treatment is priced at $100. Sabrri has the following cost structure:

Variable Cost per Treatment Fixed Cost per Month

Therapist $40

Supplies 4

Management $5,500

Laundry X

Utilities 1,400

Rent 7 6,000

Repairs/cleaning 6 1,500

Total $57 Y

Assume that all treatments have the same variable cost structure depicted in the table.

Please complete the following parts

1. The costs in the table above are all direct costs associated with the spa, except laundry. The spa and clinic use shared laundry services. The total monthly budget for laundry services is $300. The cost driver is laundry loads, and the laundry services budget is based on 75 loads of laundry for the spa and clinic combined. The spa's budget should be based on their anticipated use of 50 loads of laundry per month. Determine the amount of laundry cost per month that the spa should budget, and put the number in for "X" in the table above. Then, add up the fixed cost column and put in a number for "Y" in the table above.
2. Calculate the number of treatments Sabrri must perform each month in order to break even.
3. In April, the therapists are expected to perform 550 treatments. Prepare a budget for April assuming 550 treatments are given.
4. Assume some time has passed, and actual results for April are available. The spa actually performed 530 treatments and incurred the following actual costs. Prepare a variance analysis for April comparing actual performance to the simple budget based on 550 treatments that you created in Part C.

Actual Operating Results for April

Revenue $53,000

Therapists $21,280

Supplies 1,795

Management 5,125

Laundry 220

Utilities 1,505

Rent 9,710

Repairs/cleaning 5,080

Total Expenses $44,715

Actual Profit 8,285

1. Explain and interpret the simple variance analysis results that you just determined.
2. Prepare a variance analysis for April comparing actual performance to a flexible budget based on the actual number of treatments performed in April of 530 treatments.
3. Explain and interpret the flexible variance analysis results that you just calculated.
4. Do the break-even calculation you performed in Part B and the budgeted and actual profits computed in Parts C, D, and F accurately capture the true economics of Sabrri, especially from the perspective of the doctors who invested in the spa? Explain why or why not.