...Snap Fitness Cost-Volume-Profit and Break-Even Analysis Anne, Bratcher Kim Collins, Heather Davis ACC/561 August 13, 2012 Dr. Sandra Welch Snap Fitness Even though owning a business can be costly, finding one that aligns with an individual’s ability to invest and operate is challenging. Health and fitness continues to be one of the biggest markets today. Snap Fitness is a growing franchise chain of fitness clubs that is a reasonably priced investment with relatively fast turn around on investment. Franchise History Peter Taunton founded this chain of fitness clubs in 2003 in Chanhassen, Minnesota. This fitness operation presents individuals looking for a way to own their own business in the fitness industry by offering affordable franchising opportunities. These franchise opportunities are client-friendly and can be found across the globe. Snap Fitness clubs are open 24 hours daily and seven days a week. Memberships in one of these fitness clubs give clients opportunities to fit a work out in at their convenience. Many fitness organizations require members to enter into annual contracts that can offer savings if purchasing two or more year plan. Another good feature of the fitness club allows the client to work out at any Snap Fitness facility in the United States...
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...Snap Fitness, a fitness business based in Minnesota, offers franchise opportunities. The opportunity comes with a start-up fee ranging from $60,000 to $184,000. The following items are included in the start-up fee: 1. Franchise Fee 2. Grand Opening Marketing 3. Leasehold Improvements 4. Utility and Rent Deposits 5. Training Many people dream of owning a business as opposed to working for another business. The benefits of owning a franchise is priceless if ran properly. This paper will show an estimate amount of variable costs and monthly sales in members and dollars for Snap Fitness. Also included are five examples of variable costs and a summary about purchasing a franchise and the decisions that come along with it. Estimate Amount of Variable Costs A Snap Fitness franchise is estimated to incur fixed operating costs of $4,000 and $2,000 to lease fitness equipment. A newspaper article providing details about fitness centers like Snap Fitness states this form of business may only require 300 members to reach its break-even point. The cost-volume-profit, also known as CVP, analysis will assist Snap Fitness in determining the effects of changes of volume and costs on the business’ profits. The CVP analysis will help the new franchise apply appropriate profit planning. The CVP analysis determines profit by subtracting total revenue from total costs. The equation separates costs into variable and fixed. The equation coverts to profit = total revenue -...
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...CVP Analysis Introduction According to “Snap Fitness,” (2011), “economically, the health club industry has proven to be recession-proof, averaging an 8% annual growth rate since the early 1990’s across all health clubs and gyms,” (Fitness Franchise Opportunities). Snap Fitness franchising offers opportunities for entrepreneurs to open a successful business that has already allocated the following benefits and services for consumers and for the franchisee: Location of fitness needs is open 24/7 Can be easily operated with one employee Affordability for the owner and consumer Business training and start-up marketing include Snap Fitness clubs that have been open for 2 years as of December 31,2012 o (13%) have more than 740 members o 387 (50%) have more than 469 members o 523 (68%) have more than 305 members. This paper will identify the estimation of Snap Fitness’ start-up and variable costs with the inclusion of a cost-volume-profit analysis, the measures needed to achieve net income, its various variable costs, and an analysis on why opening a franchise with Snap Fitness would be a good idea. Estimation of Snap Fitness’ Start-up and Variable Costs (Section A) In determining what Snap Fitness estimated variables are, one needs to look at the monthly fixed costs. Currently, each location of Snap Fitness spends $4,000 in fixed operating expenses and $2,000 to lease equipment. The total of each location’s fixed cost is $6,000. To break even for their...
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...Snap Fitness Exercise Centers 12 May 2012 Part A & B –Variable Costs and Target Net Income Analysis CVP analysis requires that all company costs be identified as variable or fixed. Investopedia defines variable costs as, “costs that vary depending on a company’s production volume; they rise as production increases and fall as production decreases”(pg 1). Fixed costs do not change with an increase or decrease in the amount of production. Snap Fitness’ fixed costs are $4,000 a month for operating expenses and $2,000 for the equipment lease (Total $6,000). The amount of members estimated to break-even is 300 at a monthly price of $26. To find variable costs, the equation is listed below: (a) Break-even point = Variable costs + fixed costs + Net income 300*($26.00) = Variable costs + $6,000 + 0 $7,800 = Variable costs + $6,000 Variable costs = $7,800 - $6,000 = $1,800. (b) What would the monthly sales have to be to achieve a target net income of $10,000. (Fixed costs + target net income) / contribution margin ratio = required sales in dollars. Contribution margin ratio = contribution margin / sales. Contribution margin = Sales – variable expenses. $7800 – 1800 = $6,000 6000 / 7800 = 77% contribution margin ratio. ($6000 + $10,000) / 77% = $16,000/0.77 = $20,779 Based on the fixed costs provided, $20,779 in monthly sales would...
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...Snap Fitness is a Minnesota-based business CHAPTER 19 – PAGES 1001-1002 BYP19-7 Many of you will some day own your own business. One rapidly growing opportunity is no-frills workout centers. Such centers attract customers who want to take advantage of state-of-the-art fitness equipment but do not need the other amenities of fullservice health clubs. One way to own your own fitness business is to buy a franchise. Snap Fitness is a Minnesota-based business that offers franchise opportunities. For a very low monthly fee ($26, without an annual contract) customers can access a Snap Fitness center 24 hours a day. The Snap Fitness website (www.snapfitness.com) indicates that start-up costs range from $60,000 to $184,000. This initial investment covers the following pre-opening costs: franchise fee, grand opening marketing, leasehold improvements, utility/rent deposits, and training. Instructions (a) Suppose that Snap Fitness estimates that each location incurs $4,000 per month in fixed operating expenses plus $2,000 to lease equipment. A recent newspaper article describing no-frills fitness centers indicated that a Snap Fitness site might require only 300 members to break even. Using the information provided above, and your knowledge of CVP analysis, estimate the amount of variable costs. (When performing your analysis, assume that the only fixed costs are the estimated monthly operating expenses and the equipment lease.) (b) Using the information from part...
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...CVP And Break-Even Analysis Paper CVP And Break-Even Analysis Paper Looking into opening a small business can be a daunting task but, with various opportunities for buying into a franchise, becoming a small business owner seems to be a reality for some. Each franchise provides various information pieces about their franchise to attract new owners. When someone is looking to invest in a franchise, doing your own analysis to validate the information provided by the franchise is critical in understanding whether or not the franchise is going to be as profitable as you would like. One such franchise is Snap fitness out of Minnesota and knowing the fixed cost of operating the franchise we can determine how many members are needed to break even. Also included is an analysis of achieving a $10,000 net income for a month of operations. To be a valid analysis we have included five examples of variable cost associated with a fitness center. Variable Cost As the owners of a new business, our ultimate goal is to make a profit. Profit can be measured in many ways and there are many complex techniques that can be used to calculate how much of a product or service must be sold to produce a profit. Cost Volume Profit analysis or CVP is one of the most useful ways for managers to understand the relationship between cost, volume, and profits and make competent management decisions. CVP analysis focuses on five areas: • Unit selling prices • Variable cost per unit ...
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...CVP Analysis and Presentation ACC/561 2012 Cost Volume Profit and Break-Even Analysis Break-Even Analysis-Volume-Analysis is a systematic method of examining the relationship between changes in volume (that is output) and changes in Sales Revenue, Express and Net Profit. As a model of these relationships, Break-Even Analysis simplifies the real-world conditions which a firm will face. The objective of Break-Even Analysis is to establish what will happen to the financial results if a specified level of activity or volume fluctuates. This information is vital to management, as one of the most important variables influencing total sales revenue, total costs and profits is output or volume. Break-Even Analysis is based on the relationship between sales revenue, costs and profit in the short run. The short run being a period in which the output of the firm is restricted to that available from current operating capacity in the short run, some inputs can be increased but others cannot. For example, additional supplies of materials and unskilled labor may be obtained at short notice, but it takes time to expand the capacity of the Plant and Machinery. Thus output is limited in the short run because Plant facilities cannot be expanded. It also takes time to reduce capacity, and therefore, in the short run, a firm must operate on a relative constant stock of production resources. Break-Even Analysis Assumptions It is essential that anyone preparing...
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...Competitive Analysis The health club industry has continued to see an increase in the amount of health clubs/fitness centers. Since 1992, the United States has seen the number of health clubs increased by almost 40 percent, from 12,635 to 17,531 facilities. It has also seen an increase in membership by almost 60 percent, from 20.8 million to 32.8 million. What this all means for Fun 4 Life Fitness Center, LLC is that the market is ever growing which translates to more competition. Most fitness centers offer a variety of services to address the needs and convenience of the customers. Some of these services includes personal trainers, facilities with state-of-the-art equipment, and programs that cater to mostly every demographic. Fun 4 Life Fitness will seek to have a competitive edge by providing customers with stellar customer service along with offering a variety of programs and equipment that is sure to develop a following for Fun 4 Life Fitness Center, LLC. Key Competitors The key competitors that have fitness centers in the Corpus Christi area are Gold’s Gym, Freedom Fitness of Corpus Christi, Corpus Christi Snap Fitness Center, and Corpus Christi Athletic Club. Gold’s Gym specializes in providing some of the best cardio and strength equipment to help people realize their goals. Some of their strengths include the programs they offer, their personal trainer staff, and most importantly, the Gold’s Gym brand name. They have built up a reputation for being...
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...|[pic] |Course Design Guide | | |School of Business | | |ACC/561 Version 4 | | |Accounting | Copyright © 2011, 2009, 2008 by University of Phoenix. All rights reserved. Course Description This course applies accounting tools to make management decisions. Students learn to evaluate organizational performance from accounting information. Other topics include financial statements, cost behavior, cost allocation, budgets, and control systems. Policies Faculty and students/learners will be held responsible for understanding and adhering to all policies contained within the following two documents: • University policies: You must be logged into the student website to view this document. • Instructor policies: This document is posted in the Course Materials forum. University policies are subject to change. Be sure to read the policies at the beginning of each class. Policies may be slightly different depending on the modality in which you attend class. If...
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...lululemon athletica “Do you lulu?” Marketing Campaign 2011-2012 Table of Contents pg. 3 pg. 6 pg. 7 pg. 9 pg. 10 pg. 11 pg. 15 pg. 17 pg. 22 pg. 43 pg. 46 pg. 47 Introduction Executive Summary Research Objectives Situation Analysis Consumer Analysis Industry Analysis Broad Overall Analysis Strategies and Plans Timeline and Budgets Summary References and Appendices Introduction Bulldog Marketing is a marketing communications firm based out of Houston, Texas, that has extensive education and experience with building brand awareness and online sales. Our team members have an eclectic background in business, marketing, digital marketing, media relations, new and social media, and public relations. Our proven results as a team speak for themselves, as we have created successful campaigns and strategies for a number of high-caliber clients. We chose to focus on lululemon athletica because we feel the brand has very strong potential in the U.S. market. lululemon has strong sales and is growing at a fast rate every year. Since lululemon is a Canadian-based brand, the brand awareness in the United States as yet to reach its full potential. We at Bulldog Marketing feel that our combined experience coupled with lululemon’s strong branding that already exists in other markets will prove to be successful. We look forward to working with you in the months ahead and building the lululemon brand. 3 Meet the Team Nicole Grandy has...
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...Financial Analysis: Chipotle Mexican Grill, Inc When reviewing a company’s financials and trends within, it is important to seek the industry average therefore you have something to compare them to. Every industry’s averages are much different and can be interpreted from many angles. For example: Chipotle Mexican Grill caries a trailing price to earnings ratio of 42x which is much higher than its competitors such as McDonalds, who carries a 17x p/e, or Yum Brands, who carries a 24x p/e ratio. From this data you can infer that chipotle is overpriced compared to competition, which also means the market likes the stock. Then you must stand back and look at the data from an even different angle and notice that P/E ratios as a whole don’t matter as much during a time of such a bull market, they are just an indicator that the company will be a more risky investment when the market eventually pulls back. It is also important to understand that even though companies may be competitors they really may not be all that similar. Yum’s Foods has 39,000 stores in 125 countries with broad exposure in china and India where middle income is higher and help them maintain growth as a rather mature company. Whereas Chipotle is mostly domesticated here in America where the spending gap is growing and the market is very saturated, which may cause concern for where the growth company will find its growth. That is where these companies differ; Chipotle is in a relatively new market called, “the...
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...................................................2 5. The Nutritional Supplements..........................................................................8 6. The Gym Trend..................................................................................................13 7. The Fitness Trainers........................................................................................15 7.1 Gym Index..................................................................................................................16 8. Interesting information gathered from the survey...............................19 9. Estimates of Sampling Errors.......................................................................19 10. References........................................................................................................20 Exhibits....................................................................................................................21 Gym Survey Report - Bangalore 2010 ii Appendix Appendix 1: Institutes In India Providing Fitness Certifications........................1 Appendix 2: Fitness Equipment Manufacturers in India.....................................10 Appendix 3: Major Fitness Equipments Brands In India (Imported)............14 Appendix 4: Nutritional Supplement Manufacturers in India...........................16 Appendix 5: International Nutritional...
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...Strategic Marketing Plan Q2 2004 – Q4 2007 Page 1 of 89 DECLARATION We hereby certify that this assignment contains no material which has been accepted for the award of any other degree or diploma in any university or equivalent institution, and that to the best of our knowledge and belief, contains no material previously published or written by another person except where due reference is made in the text of this assignment. Viraj Perera Sara Russell Ingrid Szikla ID: 18877095 ID: 18481183 ID: 13034715 Page 2 of 89 EXECUTIVE SUMMARY This strategic marketing plan specifically addresses Uncle Tobys Ready to Eat (RTE) Breakfast Cereal products in Australia over the time period starting from the second quarter of 2004 and ending fiscal year 2007 (1/10/2004 – 30/6/2008). This plan takes into account and builds on new marketing strategies for Uncle Tobys resulting from the take-over by Burns Philp in the USA. Uncle Tobys is a leading brand of Goodman Fielder, which is a division of Burns Philp Company Ltd. Until 2002, Uncle Tobys had the second greatest share of the RTE market by value with 20.3% in 2001, but has since slipped to third place at 15.9% in 2003 and is now behind Sanitarium (17.2%) and Kellogg’s (55.4%). Contributing factors were issues such as high debt and lack of effective IMC strategy. However, it is anticipated that efficiency gains from the new organisational structure will come into fruition during 2004-05, and Burns Philp’s...
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...Rebuilding LEGO (short descriptive part of Lego a The Lego group is fifth largest toy manufacturer in the world On the surface, the Lego Group didn’t look as if it was in trouble. The fourth-largest toymaker in the world at the time (today it is fifth-largest), the Lego Group sold €1 billion (US$1.35 billion) worth of toys in 2004, ranging from its snap-together bricks for young children to Mindstorms, a line of do-it-yourself robot kits for older kids. Even in the digital age, its toys maintained a surprisingly firm grip on the market and seemed to adapt well to changing tastes. The company’s steady stream of new products routinely generated three-quarters of its yearly sales. Popular enthusiasm was so great that in 2000, the British Association of Toy Retailers joined Fortune magazine in naming the company’s classic bricks “the toy of the century.” But the Lego Group’s financial performance told another story. Despite its extraordinary hold on the imagination of children around the world, the Billund, Denmark, company was in trouble. The Lego Group had lost money four out of the seven years from 1998 through 2004. Sales dropped 30 percent in 2003 and 10 percent more in 2004, when profit margins stood at –30 percent. Lego Group executives estimated that the company was destroying €250,000 ($337,000) in value every day. How could such a seemingly successful toymaker lose that much money? Some observers speculated that the Lego Group had overdiversified its product line...
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...Table of Contents Introduction……………………………………………………….……………..Page 3 Strategic Business Assessment………………………………;….………………Page 4 Competition………………………………………,…………….……………….Page Technology………………………………………………………………………Page Design a Wireless System………………………………………………………..Page Planned Competitive Improvements……………………………………………...Page Other Competitive Technological Solutions……………………………………..Page Upgrading to Next Generation……………………………………………………Page Summary and Conclusions……………………………………………………….Page Work Cited……………………………………………………………………….Page Introduction The first generation of cellular networks or 1G was first build in Chicago in 1977. It uses multiple cell towers sites, each connected through a network, allowed users to travel and even switch cell towers during a call. It was known as the Analog Mobile System (AMPS) and operates on the 824-894MHz range. A Japanese telecommunications company NTT builds their own network in 1979, which became the first 1G network to cover an entire country. In 1981, the Nordic Mobile Telephone network was the first to feature international roaming. It operates in Denmark, Sweden, Finland and Norway. Mobile phones start becoming popular in the United States in the late 80’s and early 90’s when phones were small enough to carry without been in a car or suit case. Strategic Business Assessment United States...
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