Question

20 points Question 4 Save Answer An Al Ain based Gym/Fitness company has fixed costs of 50,000 AED. /month and a variable costs of 20 AED/per fitness class member. The company currently charges 120 AED for each fitness class member and has in total 800 members taking classes per month. The Gym can accommodate maximum up to 2000 members The Gym wants to raise the class charge to 150 AED to cover enhanced features such as new music and energy drinks which will increase the variable cost by 25 percent. a. Determine the break-even quantity in terms of members. b. Determine the total income (revenue) from the break-even membership. c. Determine the percentage of total capacity at the break-even point. d. Determine the new breakeven point if enhanced features of 10% included the break-even quantity in terms of members. the total income (revenue) from the break-even membership B, 650 members C. 400 members the percentage of total capacity at the break-even point. new breakeven point if enhanced features of 50% included E. 80.000 AED A. 25% D. 60,000 AED F. BOM G. 350 members H. 500 members 988 &

Answer 1

A] break even quantity in term of members = FIXED COST/ total charge- variable cost= 50000/120-20=500 members

B]total revenue at break even quantity= 500*120= 60000 AED

c]the percentage of total capacity at the break even point=[ break even point/ total capacity]*100

=[500/2000]*100=25%

d]breakeven point if enhanced features of 10% included

therefore, 90% of previous break even point =500*90%=450

and 10% of enhanced

actual BEP at enhanced feature= 50000/[150-25]=400

therefore 10% of 400 units = 40

so total BEP at 10% enhanced feature= 450+40=490 members.

so new BEP WITH 100% enhanced = 400 members

total income with 400 members=400*150=60000AED

and total income at 10% enhanced= 450*120+40*150=60000 AED

the percentage of total capacity to BEP at 490 members= [490/2000]*100=24.5%

new break even point if enhanced features of 50% included= 500*50%+400*50%=450 members.