La's Gym Case Summary
HOMEWORK 1 (Total Possible Points: 100)
You MUST show your work!
Problem 1: CVP analysis (30 points total)
The owners of LA’s Gym currently are working on their operating plan for the coming year, and they have provided you with the following average membership and cost data for the previous year:
Annual membership fee $500 per member
Number of members 6,000
Variable cost (supplies, instructors, etc.) $160 per member
Fixed costs (equipment, salaries, etc.) $1,224,000
The owners anticipate that, for the coming year, both total fixed costs and the variable cost per member will remain unchanged from the previous year.
Assuming the same number of members as last year, what is LA’s expected profit for the coming year? (10 points) …show more content…
(10 points)
The owners of LA’s Gym are considering reducing the annual membership fee by 10%. They believe this will increase membership to 7,500 members for the coming year. What will profit be if the owner’s adopt this strategy (note: the membership fee for all members will be reduced by 10%)? Does this seem like a good option? Support your answer with calculations. (10 points)
Problem 2: CVP analysis (10 points total)
Cobb Corporation produces three products, A, B and C. The normal volume is 900 units of A, 120 units of B and 180 units of C. The price per unit is $5, $7, $10, for products A, B, and C, respectively. The variable cost per unit is $2, $3, $4, for products A, B, and C. respectively. The total fixed costs are $5,800.
What is the weighted average contribution margin per unit?
Problem 3: Job costing and overhead allocation methods (30 points total)
DeKalb Company's actual manufacturing overhead cost for the month of September was $80,000. The company's predetermined overhead rate was 50% of direct labor cost. Other information pertaining to DeKalb's inventories and production for the month of September is as
You MUST show your work!
Problem 1: CVP analysis (30 points total)
The owners of LA’s Gym currently are working on their operating plan for the coming year, and they have provided you with the following average membership and cost data for the previous year:
Annual membership fee $500 per member
Number of members 6,000
Variable cost (supplies, instructors, etc.) $160 per member
Fixed costs (equipment, salaries, etc.) $1,224,000
The owners anticipate that, for the coming year, both total fixed costs and the variable cost per member will remain unchanged from the previous year.
Assuming the same number of members as last year, what is LA’s expected profit for the coming year? (10 points) …show more content…
(10 points)
The owners of LA’s Gym are considering reducing the annual membership fee by 10%. They believe this will increase membership to 7,500 members for the coming year. What will profit be if the owner’s adopt this strategy (note: the membership fee for all members will be reduced by 10%)? Does this seem like a good option? Support your answer with calculations. (10 points)
Problem 2: CVP analysis (10 points total)
Cobb Corporation produces three products, A, B and C. The normal volume is 900 units of A, 120 units of B and 180 units of C. The price per unit is $5, $7, $10, for products A, B, and C, respectively. The variable cost per unit is $2, $3, $4, for products A, B, and C. respectively. The total fixed costs are $5,800.
What is the weighted average contribution margin per unit?
Problem 3: Job costing and overhead allocation methods (30 points total)
DeKalb Company's actual manufacturing overhead cost for the month of September was $80,000. The company's predetermined overhead rate was 50% of direct labor cost. Other information pertaining to DeKalb's inventories and production for the month of September is as