November 28, 2011
Dr. Zeneo Williams, Ed. D., CFM
Snap Fitness Franchise Opportunity
The Cost-Volume-Profit analysis (CVP) for Snap Fitness provides an evaluation of its profits as costs and volume changes. As the owner of a Snap Fitness franchise, decisions about selling prices, product mix, and maximizing the use of the fitness center depends on CVP. A CVP analysis classifies cost as variable and fixed, and calculates a contribution margin. Relevant information identified in the analysis is the total monthly fixed costs of Snap Fitness, which are $6,000. Monthly fixed operating costs are $4,000 and monthly lease equipment costs are $2,000. The fitness …show more content…
Additionally, proper maintenance will ensure the longevity of the equipment. Although monthly and routine checks of the equipment may be part of an employee’s responsibilities, replacing or repairing damaged equipment could be a cost that varies greatly from month to month. One way to reduce or manage this variable cost is to inspect equipment regularly and address problems immediately before they become larger problems.
Another variable cost to consider is continuing education and training for employees. Like any business, it is important for those in the health and fitness field to stay on top of current trends in the industry. From time to time, it may be beneficial and necessary for full-time employees to attend seminars or training sessions to expand their knowledge in the industry. This cost can be budgeted on a quarterly basis, but the cost of training will fluctuate based on the fees and location of the training.
Overlooking the expense of office supplies and fuel can have a serious impact on a business. Office supplies in a gym may be detrimental because these supplies are required for new members to complete an application, are used in the hiring process, and are required for managing the company’s financial records. In most organizations, the need for fuel is required for company vehicles and can add negatively to a budget.
A final variable cost to consider is the extra cost related to employee turnover. One good thing