Snap Fitness would need to achieve 800 memberships to generate a monthly net income of $10,000.
Snap Fitness Variable Cost Types Variable costs are costs that vary in total directly and proportionately with changes in the activity level. If the level increases 10%, total variable costs will increase 10%. If the level of activity decreases by 25%, variable costs will decrease 25%. Variable costs include direct materials and direct labor, costs of goods sold, and sales commission. A variable cost may also be defined as a cost that remains the same per unit at every level of activity (Kimmel, Weygandt, & Kieso, 2009). Variable costs for Snap Fitness can membership sales. Active memberships are important in determining how much revenue the fitness center can bring in monthly. Snap Fitness does not have an enrollment fee or contract, their standard membership fee of $26.00 will easily generate new customers. In addition to becoming a member, a customer can have a personal trainer for additional monthly costs. This cost will vary according to how often the customer wants to utilize the service. The cost can be higher or lower if the customer decides on individual training sessions or to split the cost with other members. Retail sales within the fitness center are considered variable costs. These include merchandise, supplements, vending, locker rentals and equipment sales. Most fitness centers do not require many employees. If it is a small facility, one or two employees are more than enough. Personal trainers are normally contracted for a fee based on the number of customers being served. Most fitness centers will not go over 10 to 12% in order to keep labor cost at a minimum. Most fitness centers require customers to pay via credit cards of debit cards. The merchant processing fees associated with these cards for customers monthly membership fees will vary based