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    ACT308 Case Study

    Uploaded by

    Sherab Zangmo
    The document analyzes the profitability of Space and Light Studios (SLS) from December 2012 to May 2013. It provides tables showing revenue, costs, and profit for SLS over these months. Some key findings are: - Though initially unprofitable, SLS saw increasing positive contributions and decreasing losses over time, suggesting it could become profitable. - The break-even point for SLS in May 2013 was estimated to be 125 classes or revenue of $27,379. - When estimating profitability by class type, group classes were estimated to have a loss while private and salt cave classes had estimated profits. Private classes had the highest estimated profit per class.

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    ACT308 Case Study

    Uploaded by

    Sherab Zangmo
    28 views4 pages
    The document analyzes the profitability of Space and Light Studios (SLS) from December 2012 to May 2013. It provides tables showing revenue, costs, and profit for SLS over these months. Some key findings are: - Though initially unprofitable, SLS saw increasing positive contributions and decreasing losses over time, suggesting it could become profitable. - The break-even point for SLS in May 2013 was estimated to be 125 classes or revenue of $27,379. - When estimating profitability by class type, group classes were estimated to have a loss while private and salt cave classes had estimated profits. Private classes had the highest estimated profit per class.

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    The document analyzes the profitability of Space and Light Studios (SLS) from December 2012 to May 2013. It provides tables showing revenue, costs, and profit for SLS over these months. Some key findings are: - Though initially unprofitable, SLS saw increasing positive contributions and decreasing losses over time, suggesting it could become profitable. - The break-even point for SLS in May 2013 was estimated to be 125 classes or revenue of $27,379. - When estimating profitability by class type, group classes were estimated to have a loss while private and salt cave classes had estimated profits. Private classes had the highest estimated profit per class.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    28 views4 pages

    ACT308 Case Study

    Uploaded by

    Sherab Zangmo
    The document analyzes the profitability of Space and Light Studios (SLS) from December 2012 to May 2013. It provides tables showing revenue, costs, and profit for SLS over these months. Some key findings are: - Though initially unprofitable, SLS saw increasing positive contributions and decreasing losses over time, suggesting it could become profitable. - The break-even point for SLS in May 2013 was estimated to be 125 classes or revenue of $27,379. - When estimating profitability by class type, group classes were estimated to have a loss while private and salt cave classes had estimated profits. Private classes had the highest estimated profit per class.

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    © All Rights Reserved
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    You are on page 1of 4

    Space and Light Studios

    1. Estimate the current profit figures of SLS from December 2012 to May 2013 to evaluate
    the viability of the business.
    Data given in the case

    Table1. Number of Classes Taken


    Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13
    Group 112 137 113 143 135 155
    Private 7 21 15 33 10 18
    Salt Cave 0 6 0 1 1 6
    Total 119 164 128 177 146 179

    Table 2. Number of Client Visit


    Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13
    Group 296 1009 699 998 907 1048
    Private 7 21 15 33 10 18
    Salt Cave 0 18 0 2 2 12
    Total 303 1048 714 1033 919 1078

    Table 3. Average Revenue Per Client


    Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13
    Group 10 10 15 15 21 21
    Private 130 130 130 130 130 130
    Salt Cave 70 70 70 70 70 70
    Total 210 210 215 215 221 221

    Calculation of Revenue
    To calculate the revenues, monthly number of client visits for each class is used since the
    average revenue data is provided on per client visit.

    Table 4. Total Revenue


    Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13
    Group 2960 10090 10485 14970 19047 22008
    Private 910 2730 1950 4290 1300 2340
    Salt Cave 0 1260 0 140 140 840
    Total 3870 14080 12435 19400 20487 25188
    Calculation of Cost

    Table 5. Variable Cost


    Dec Jan- Feb- Mar- Apr- May-
    2012 2013 2013 2013 2013 2013
    Salary for teacherss 7140 9840 7680 10620 8760 10740
    Salt Cave 0 225 0 37.5 37.5 225
    Total 7140 10065 7680 10657.5 8797.5 10965

    Table 6. Fixed Cost


    Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13
    Rent 11191 11191 11191 11191 11191 11191
    Share facilities 3500 3500 3500 3500 3500 3500
    MD software cost 70 70 70 70 70 70
    Shuttle bus services 0 0 0 0 700 700
    Total 14761 14761 14761 14761 15461 15461

    Calculation of Current Profit

    Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13


    Revenue 3870 14080 12435 19400 20487 25188
    Less: Variable
    cost 7140 10065 7680 10657.5 8797.5 10965
    Contribution (3270) 4015 4755 8742.5 11689.5 14223
    Less: Fixed cost 14761 14761 14761 14761 15461 15461
    Net Profit/ (Loss) (18031) (10746) (10006) (6018.5) (3771.5) (1238)
    Table 7. Marginal Statement

    Though SLS were not profitable during the 6 months after taking over the business,
    however, SLS had an increasing positive contribution and decreasing net losses. Based on
    the above result, SLS can be a profitable in near future.
    2. Examine SLS’s break-even point for May 2013.
    Calculation of Break-Even Point for May 2013
    i. Break-Even in Sales (Classes)
    ¿ Costs
    Break−even∈ Sales (Classes )=
    Unit Selling Price−Unit Variable Cost

    15,461
    Break−even∈ Sales (Classes )=
    221−97.5

    15,461
    Break−even∈ Sales (Classes )=
    123.5
    Break−even∈ Sales (Classes )=125 classes

    ii. Break-Even in S$

    ¿ Costs
    Break−even∈ S $=
    PV Ratio

    Contribution
    PV Ratio=
    Sales
    14,223
    PV Ratio= ×100
    25,188
    PV Ratio=56.47 %
    Therefore,
    15,461
    Break−even∈ S $=
    56.47 %
    Break−even∈ S $=S $ 27,379.14

    Therefore, SLS will covered all its fixed cost and variable cost in May 2013 with the 125 yoga
    classes and revenue of S$ 27,379.14.
    3. Estimate the profitability of conducting each type of yoga class-i.e. group classes, private
    classes, and salt cave classes.
    Table 8. Profitability

    Group Private Salt Cave


    Revenue 22,008 2,340 840
    Less: Variable Costs
    Teachers' payment 9300 1080 360
    Salt cave - - 225
    Contribution 12,708 1,260 255
    Less: Fixed Costs
    Rent 10,026.62 1164.38 -
    Share facilities 3030.72 351.96 117.32
    MD software cost 70 - -
    Shuttle bus services 606.15 70.39 23.46
    Net Profit/(Loss) (1,025.49) (326.73) 114.22

    Note: The fixed costs are allocated among group, private and salt cave classes as per their
    monthly number of classes. For MD software cost, it was all allocated to group class since it
    generates more revenue compare to other two classes and also the amount is small. And for
    rent, salt cave had to pay different rent for salt stretch class so, it was include in variable
    cost.
    Number of class
    Group Private Salt Cave Total
    155 18 6 179

    Group Private Salt Cave


    Ratio 155/179 18/179 6/179

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