A group of developers is opening a health club near a housing development. The developers incur an
Question:
A group of developers is opening a health club near a housing development. The developers incur an annual fixed cost of $951900 for the building, equipment, utilities, and staff. The club spends $180 per member on water, towels, laundry, and other services. Each health club member generates power from a treadmill worth $2 per month. Each enrolled member pays $180 per month for the membership.
a) How many members will the club need to break even? What is the breakeven in dollars?
After the first year, the company can triple the breakeven membership (breakeven members in the first year) and reduces the membership fee from 180 to 150
b) What would be the profit in the second year?
c) If the developers need a profit of $823620 in the second year, how many members need to be enrolled?
d) If the developers spend for an advertisement campaign $281100 in the second year, how many members should the club enroll to break even?