CVP and Breakeven Analysis Paper

1543 WordsApr 15, 20137 Pages
CVP and Break-Even Analysis Paper Learning Team A ACC/561 Instructor 2013 CVP and Break-Even Analysis Paper When starting a business or buying a franchise it is critical for one to determine the star-up cost associated with the business. However, the most import item one must look at is the breakeven point. The breakeven point is important because it helps one plan out its activities to gives business owners an idea of the sales needed to cover its cost before one can make a profit. Within this paper, Learning Team A will examine the start-up cost and breakeven point for a Snap Fitness franchise owner. Variable Costs “Snap Fitness estimates that each location incurs $4,000 per month in fixed operating expenses plus $2,000…show more content…
Examples of Snap Fitness variable costs are cost of labor wages, electricity, water usage, equipment purchase, and repair. “In a service business, there are often fewer variable costs. The main variable cost in providing a service is the cost of wages for an employee working directly in providing the service” (Rural Women’s Network, 2013). Snap Fitness provides each of their new members a 60-day fitness plan presented to them by a personal trainer. The wages to pay each trainer will vary depending on how many trainers are needed and how many hours a day each trainer is needed for. The cost of wages will rise and fall as members sign up. Wages to pay the front desk staff, cleaners and launderers will also vary depending on how many people enter the gym
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