You have been appointed as the costing manager of a large health club having a membership of around 2000-2500 members. The club provides personal trainers for its members on request as an add-on facility. The club pays a small salary to the hired personal trainers as remuneration. In addition to this, these trainers are paid commission for each lesson to the members. Additionally, the club has a swimming pool and contracts instructors for swimming classes. Your club also has a fruit juice bar that sells a few lunch items, such as sandwiches.
Consider the given scenario and discuss the following:
How will you evaluate the fixed costs of the health club?
How will you arrive at the total variable costs the club incurs?
Do you agree that only variable costs incurred in your health club can be termed as its differential costs? Explain using a practical example.
What are the three most essential steps you should follow as the club's costing manager for assignment of indirect costs or cost allocation?
Do you believe the cost management information you provide to the club should be timely and accurate? Substantiate your response with reasons.
What do you think is more important-the timelines of cost management information of your club or its accuracy?