Final ppt acct 2302 project (revised)
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This document summarizes a proposed 24-hour gym business called Gym Inc. located in Tyler, TX. It will offer services like weight training, fitness training, yoga, and tanning beds. Memberships will be $50 per month with magnetic key access. Equipment includes 10 treadmills, 10 elliptical machines, weight sets and machines. Labor will include instructors, a receptionist, clerk and supervisor. The breakeven point is 651 memberships or $390,850 in revenue. The target net income is 10% of invested assets, or $5,900. An analysis of costs and revenues shows net income of $11,531, nearly meeting the target.
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Final ppt acct 2302 project (revised)
- 1. GYM INC. Megan Utz Rindi Malone Graham Gillespie Jonathon Sayler Isaac Cammack
- 2. 24-hour Gym (6,000 sq. ft. in Tyler, TX) Services Included •Weight Training •Fitness Training College Students •Yoga •Tanning Beds Magnetic Key Access Memberships Our Service
- 3. • Memberships • $50 a month • Gym Equipment • 10 treadmills, 10 elliptical machines, 3 stair-steppers • 10 weight sets and machines • 2 level one tanning beds • Labor • Janitor • Aerobics, Yoga, and Weight Instructors • Receptionist • Clerk • Supervisor Descriptive Process
- 4. Breakeven Point Target Net Income • In service units • 10 percent of invested • 651 assets • In revenue dollars • $5,900 • $390,850 $398,020.36 $390,849.92 $327,500.00 Target Breakeven Contribution CVP Revenue Point Margin
- 6. • We will accept the Comparison of Costs and special order Revenues • Revenues are much higher than costs An outside company comes to us with 100 employees. • Net income will would like to purchase memberships for The company raise $11,531 nearlyall employees at cost of $400 ($33 a month) each instead $30,000 Cost $40,000 of $600 ($50 a month) each. We have the capacity for • New members will have to buy another treadmill to this order. We will Revenue generate free increase in customers. satisfy this advertisement Relevant Decision
- 7. • We would purchase NPV $9,034 the equipment. • NPV ≥ 0 Payback to will3.33 saunaTheour•facility. generate 100 of period We want add a tiled installation be $60,000. to The total cost Shorter payback sauna will Period years • Rate of return is less additional members each year. Another janitor will need to be hired for maintenance. After 5 years the sauna will need to be than desirable retiled at a cost of $10,000. It has a lifetime of 8 years and will Rate have no salvage value. The company hopes to receive an methods of • More reliable 18% 5% rate of return and a payback period of 4 years to purchase Return point Capital Budgeting
Editor's Notes
- We are a 24-hour, anytime gym in Tyler, TX. We rent a 6,000 square foot building. We are targeting the college students of the area. We offer memberships that include services of weight training, fitness training, yoga, and tanning. Each member gets a magnetic access key for their anytime entrance.
- For simplicity, we assumed all memberships would be bought at the full year’s rate of $1,080. Gym equipment for fitness, weight training, and tanning. We also have equipment in the form of office furniture and electronics and a 4 camera security system.
- We budgeted for nearly double the amount of memberships of the break even point. This means for ever membership sold after number 651, its whole contribution margin will be converted straight to profit. At a budgeted 750 memberships, we would have to sell approximately 2 memberships a day to meet this goal (easily attainable).