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SPA PSEE practice questions

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Question 1Spa Business Operations and Management

In a day spa's operating statement, labor cost percentage is calculated by dividing total labor cost by which figure?

  1. Total service and retail revenue Correct answer.
  2. Total retail inventory purchased during the period
  3. Total square footage of the treatment area
  4. Total number of treatments performed

Explanation

Labor cost percentage is a payroll-to-revenue ratio: total labor cost divided by total revenue from both services and retail. Dividing labor by treatment count produces a cost per treatment, not a percentage of revenue. Square footage and inventory purchases are unrelated bases for this ratio.

Question 2Spa Business Operations and Management

A spa's retail inventory turnover ratio is best described as the number of times inventory is:

  1. counted by staff during a fiscal year
  2. discounted during a promotional period
  3. sold and replaced during a given period Correct answer.
  4. returned to the vendor for credit

Explanation

Inventory turnover equals cost of goods sold divided by average inventory, and it shows how many times stock is sold and replenished in a period. A high ratio generally indicates efficient retail stock management, while a low ratio suggests slow-moving or excess inventory.

Question 3Spa Business Operations and Management

A spa has 8 treatment rooms and is open 10 hours per day. On Tuesday, therapists performed 40 one-hour treatments. What is the treatment room utilization rate for that day?

  1. 50% Correct answer.
  2. 80%
  3. 40%
  4. 45%

Explanation

Available room-hours are 8 rooms multiplied by 10 hours, or 80. Occupied room-hours are 40 one-hour treatments, or 40. Utilization is 40 divided by 80, which equals 50%.

Question 4Spa Business Operations and Management

A spa plans to add a 60-minute massage priced at $120. Therapist payroll is 35% of service revenue, and product cost is $6 per treatment. What is the gross margin per treatment after therapist payroll and product cost?

  1. $72 Correct answer.
  2. $96
  3. $54
  4. $42

Explanation

Therapist payroll is 0.35 multiplied by $120, or $42. Gross margin after these direct costs is $120 minus $42 minus $6, or $72. This figure excludes overhead such as rent and utilities, so it is a contribution measure rather than net profit.

Question 5Spa Business Operations and Management

A spa's appointment book shows 30 requests for a popular Saturday, but only 24 therapist-hours are available. Which action best protects revenue while maintaining service standards?

  1. Raise every Saturday price by 50% without notifying existing clients
  2. Cancel the least expensive treatments and keep only premium services
  3. Book all 30 requests and shorten each treatment by 10 minutes
  4. Create a waitlist and incentivize clients to shift to quieter times Correct answer.

Explanation

A waitlist captures overflow demand, while incentives shift flexible clients to underused periods without compromising treatment length or quality. Shortening treatments to fit extra clients breaches the advertised service standard and can create dissatisfaction and rushed work.

Question 6Spa Business Operations and Management

Which retail merchandising practice is most likely to increase product attachment in a spa?

  1. Rotating the entire display weekly without reviewing any sales data
  2. Keeping all retail stock behind the reception desk and selling only on request
  3. Displaying only clearance items in the reception area at all times
  4. Using treatment rooms for product demonstration and therapist recommendation Correct answer.

Explanation

Product attachment rises when clients experience a product during treatment and receive a therapist's specific recommendation tied to their skin or body concerns. Consistent, visible placement and staff endorsement support retail sales better than request-only selling or random rotation.

Question 7Spa Business Operations and Management

A spa has fixed costs of $60,000 per month, variable cost of $30 per treatment, and an average treatment price of $80. How many treatments must the spa sell to break even?

  1. 1,200 Correct answer.
  2. 750
  3. 2,000
  4. 1,000

Explanation

Contribution margin per treatment is $80 minus $30, or $50. Break-even volume is fixed costs divided by contribution margin, or $60,000 divided by $50, which equals 1,200 treatments. Selling exactly 1,200 treatments covers fixed and variable costs with zero profit.

Question 8Spa Business Operations and Management

A spa reports a client retention rate of 55% and an average of 2.4 visits per client per year. Which interpretation is most useful for management?

  1. The spa should stop tracking retention and focus only on acquiring new clients
  2. Nearly half of clients are not returning, so review follow-up and loyalty efforts Correct answer.
  3. Average visits of 2.4 prove that clients are fully satisfied with every service
  4. Retail revenue will automatically rise because retention is above 50%

Explanation

A 55% retention rate means about 45% of clients did not return in the measured period, which is a meaningful leakage signal. Management should examine follow-up contact, rebooking prompts, and loyalty offers before assuming satisfaction or shifting focus solely to acquisition.

Question 9Spa Business Operations and Management

A resort spa has strong weekend demand for 50-minute massages and weak weekday demand for 80-minute body treatments. Which strategy best applies yield management principles?

  1. Offer the same percentage discount on every service each day of the week
  2. Reduce weekday hours and close several treatment rooms
  3. Lower weekend massage prices to fill every remaining slot
  4. Charge premium weekend massage prices and promote weekday body packages Correct answer.

Explanation

Yield management matches price and promotion to demand: premium pricing captures willingness to pay in constrained peak periods, while targeted weekday packages stimulate demand for underused capacity. Uniform discounting or cutting capacity can erode revenue rather than optimize it.

Question 10Spa Business Operations and Management

A spa's revenue is $600,000, of which 20% is retail. Retail cost of goods sold is $60,000. What is the retail gross margin percentage?

  1. 10%
  2. 60%
  3. 80%
  4. 50% Correct answer.

Explanation

Retail revenue is 20% of $600,000, or $120,000. Retail gross margin is ($120,000 minus $60,000) divided by $120,000, which equals 50%. Using total revenue as the denominator would incorrectly spread retail cost of goods sold across service revenue.

Question 11Spa Business Operations and Management

Which spa document defines the required sequence of steps, products, timing, and room standards for delivering a specific treatment consistently?

  1. A treatment standard operating procedure Correct answer.
  2. An organizational chart for the spa
  3. A purchase order approved by the manager
  4. A departmental profit-and-loss statement

Explanation

A treatment standard operating procedure documents the exact service sequence, product use, timing, hygiene requirements, and room setup so different therapists deliver a consistent guest experience. Financial statements, organization charts, and purchase orders support management but do not prescribe treatment delivery.

Question 12Spa Business Operations and Management

A retail product costs the spa $18. Under keystone pricing, what retail price should be set?

  1. $27
  2. $54
  3. $45
  4. $36 Correct answer.

Explanation

Keystone pricing sets retail price at twice the product cost, producing a 50% gross margin on the selling price. For an $18 cost, the keystone retail price is $36.

Question 13Spa Business Operations and Management

Which metric measures the share of available treatment-room hours that are actually sold and delivered?

  1. Treatment room utilization Correct answer.
  2. Revenue per therapist hour
  3. Retail capture rate
  4. Average daily rate

Explanation

Treatment room utilization compares delivered treatment hours with available treatment-room hours, showing how fully the spa's capacity is being used. Average daily rate describes average price, retail capture rate measures retail attachment, and revenue per therapist hour measures labor productivity.

Question 14Spa Business Operations and Management

In spa menu engineering, a treatment with high popularity but low contribution margin is classified as a:

  1. Workhorse Correct answer.
  2. Dog
  3. Star
  4. Puzzle

Explanation

Menu engineering classifies items by popularity and contribution margin. A workhorse is popular but has a low margin, so it drives traffic but contributes less profit per sale than a star.

Question 15Spa Business Operations and Management

A spa sells $10,000 of gift cards in December. By December 31, $6,000 has been redeemed for services. Under accrual accounting, what amount remains as a gift-card liability?

  1. $4,000 Correct answer.
  2. $6,000
  3. $10,000
  4. $16,000

Explanation

Cash received for gift cards is initially a liability because the spa still owes services or goods. When $6,000 is redeemed, that portion is recognized as revenue, leaving $10,000 minus $6,000, or $4,000, as the remaining liability.

Question 16Spa Business Operations and Management

A therapist is scheduled for an 8-hour shift and delivers 5.5 hours of billable treatments. The remaining time is 1 hour of documentation and cleaning plus 1.5 hours of break. What is the treatment utilization rate based on the scheduled shift?

  1. 85.00%
  2. 80.00%
  3. 72.50%
  4. 68.75% Correct answer.

Explanation

Treatment utilization equals billable treatment hours divided by scheduled shift hours. Here, 5.5 divided by 8 equals 0.6875, or 68.75%.

Question 17Spa Business Operations and Management

A spa uses an average of 12 units of retail cleanser per day. The supplier lead time is 5 days, and the spa keeps 20 units as safety stock. What is the reorder point?

  1. 60 units
  2. 72 units
  3. 100 units
  4. 80 units Correct answer.

Explanation

The reorder point equals average daily usage multiplied by lead time, plus safety stock. That is 12 times 5, or 60 units, plus 20 units of safety stock, for a reorder point of 80 units.

Question 18Spa Business Operations and Management

A spa books 250 appointments per month. The no-show rate is 12%, and the average service ticket is $90. What is the monthly service revenue at risk from no-shows?

  1. $2,700 Correct answer.
  2. $5,400
  3. $2,160
  4. $3,000

Explanation

Expected no-shows equal 250 appointments times 12%, or 30 appointments. At an average ticket of $90, the service revenue at risk is 30 times $90, or $2,700.

Question 19Spa Business Operations and Management

A spa has a Saturday therapist shortage. Service data: 30-minute express facial, price $75, variable cost $20, therapist time 0.5 hour; 60-minute massage, price $120, variable cost $30, time 1 hour; 60-minute body wrap, price $140, variable cost $55, time 1 hour; 90-minute facial, price $180, variable cost $70, time 1.5 hours. Which service should be promoted first based on contribution margin per therapist hour?

  1. 90-minute facial
  2. 30-minute express facial Correct answer.
  3. 60-minute massage
  4. 60-minute body wrap

Explanation

Contribution margin per therapist hour is price minus variable cost, divided by therapist time. The express facial earns $55 per 0.5 hour, or $110 per hour, which is higher than the massage at $90, the body wrap at $85, and the 90-minute facial at about $73.33 per hour.

Question 20Spa Business Operations and Management

A spa plans retail sales of $30,000 for next month and expects markdowns of $2,000. Beginning inventory at retail is $12,000, and target ending inventory at retail is $15,000. What is open-to-buy at retail?

  1. $37,000
  2. $45,000
  3. $33,000
  4. $35,000 Correct answer.

Explanation

Open-to-buy at retail equals planned sales plus planned markdowns plus target ending inventory minus beginning inventory. That is $30,000 plus $2,000 plus $15,000 minus $12,000, or $35,000.

Question 21Spa Business Operations and Management

Which spa planning document projects service and retail revenue, payroll, operating expenses, and profit for a defined 12-month period?

  1. The client intake record
  2. The treatment protocol
  3. The daily appointment ledger
  4. The operating budget Correct answer.

Explanation

An operating budget translates the spa's annual plan into expected revenue, payroll, operating expenses, and profit by period. It is the financial control document managers compare against actual results. Treatment protocols, intake records, and appointment ledgers support service delivery and scheduling rather than annual financial planning.

Question 22Spa Business Operations and Management

In spa retail management, the sell-through rate is calculated by dividing units sold during a period by which quantity?

  1. Units received during the period Correct answer.
  2. Units received plus units on hand
  3. Average retail inventory value
  4. Units returned by clients

Explanation

Sell-through measures how quickly a retail assortment moves by comparing units sold with units received in the same period. A high rate suggests the assortment is being absorbed by clients, while a low rate signals overbuying or weak merchandising. Adding on-hand units, using inventory value, or using returns changes the metric's meaning.

Question 23Spa Business Operations and Management

Between consecutive treatments, which task is most directly the responsibility of the spa attendant rather than the therapist?

  1. Resetting the room with clean linens Correct answer.
  2. Setting the retail price of the service menu
  3. Approving the therapist's payroll hours
  4. Confirming the client's medical contraindications before service

Explanation

Spa attendants typically handle room turnover, linen changes, supply restocking, and cleanliness between services so therapists can stay on schedule. Contraindication review belongs to the therapist or clinician, pricing is a management decision, and payroll approval sits with a supervisor. Clear role division protects both service quality and compliance.

Question 24Spa Business Operations and Management

A spa budgeted $18,000 for retail staff wages for the month and actually spent $19,800. How should the variance be reported?

  1. $19,800 favorable
  2. $1,800 unfavorable Correct answer.
  3. $1,800 favorable
  4. $18,000 unfavorable

Explanation

The variance is the actual amount minus the budgeted amount: $19,800 - $18,000 = $1,800. Because spending exceeded the budget for an expense line, it is unfavorable. Favorable expense variances occur when actual expense is below budget.

Question 25Spa Business Operations and Management

A spa sells a $300 package with standalone values of $180 for a massage, $90 for a facial, and $30 for a retail product. Using relative standalone selling prices, how much revenue is allocated to the facial?

  1. $90 Correct answer.
  2. $30
  3. $180
  4. $100

Explanation

Total standalone value is $180 + $90 + $30 = $300, so the package discount is zero in this case. The facial's relative share is $90 / $300, or 30%, applied to the $300 package price, giving $90. Allocation matters when a discounted bundle must be split among delivered services and products.

Question 26Spa Business Operations and Management

A spa records $84,000 in service revenue from 700 completed treatments. What is the average service ticket?

  1. $120 Correct answer.
  2. $140
  3. $84
  4. $100

Explanation

Average service ticket equals service revenue divided by completed treatments: $84,000 / 700 = $120. This metric helps managers track pricing, upsell effectiveness, and mix shifts over time. It should be reviewed alongside treatment count because a higher ticket can come from price increases or from more expensive service selection.

Question 27Spa Business Operations and Management

A spa supplier quotes terms of 2/10 net 30. What payment option do these terms describe?

  1. A 2% penalty if the invoice is paid after 10 days
  2. A 30% deposit within 10 days; 2% interest thereafter
  3. A 10% discount if paid in 2 days; balance due in 30
  4. A 2% discount if paid in 10 days; net due in 30 Correct answer.

Explanation

In supplier terms, 2/10 net 30 means the buyer may deduct 2% from the invoice if payment is made within 10 days; otherwise the full net amount is due by day 30. Taking the discount lowers product cost but affects cash flow. Missing the discount window does not create a stated penalty under these terms.

Question 28Spa Business Operations and Management

A spa can launder linens in-house for $1.20 per pound plus $2,000 fixed monthly cost, or outsource at $1.75 per pound. At what monthly volume is total cost equal?

  1. 3,636 pounds Correct answer.
  2. 5,455 pounds
  3. 2,000 pounds
  4. 4,000 pounds

Explanation

Set in-house cost equal to outsourced cost: $2,000 + $1.20x = $1.75x. The difference in variable cost is $0.55 per pound, so the break-even volume is $2,000 / $0.55 = about 3,636 pounds. Above that volume, in-house has the lower total cost; below it, outsourcing costs less.

Question 29Spa Business Operations and Management

A spa membership priced at $99 per month includes one 50-minute massage normally priced at $120. If most members redeem the included massage each month, which financial effect should management expect?

  1. Lower per-visit revenue, steadier cash flow Correct answer.
  2. Guaranteed higher average service ticket
  3. No revenue change, higher retail attachment
  4. Higher per-visit revenue, lower recurring revenue

Explanation

A membership discount typically lowers the revenue recorded per redeemed visit compared with the standard $120 price. In exchange, monthly billing creates recurring, more predictable cash flow and supports retention. Retail attachment may improve but is not guaranteed, and the average service ticket for redeemed visits is likely lower, not higher.

Question 30Spa Business Operations and Management

A spa needs 15 massage hours next Saturday. Eight hours require advanced certification, which only three senior therapists can provide at $55 per hour; the other seven hours can be delivered by junior therapists at $35 per hour. Each therapist can work up to five hours. What is the minimum labor cost?

  1. $645
  2. $685 Correct answer.
  3. $825
  4. $725

Explanation

The eight advanced-certification hours must be staffed by senior therapists: 8 x $55 = $440. The remaining seven hours can use junior therapists at $35: 7 x $35 = $245. Total minimum labor cost is $440 + $245 = $685, and the three senior therapists have enough capacity at five hours each.

Question 31Spa Business Operations and Management

A state inspector asks a spa to prove that each massage therapist is legally permitted to practice and has met continuing-education requirements. Which record should the spa produce?

  1. The therapist credential file containing the license, expiration date, and continuing-education certificates Correct answer.
  2. The treatment protocol binder listing massage sequence and room setup
  3. The retail purchase order log showing product receipts and vendor invoices
  4. The daily appointment ledger showing completed services and therapist initials

Explanation

Licensure and continuing education are personnel compliance records, not service-delivery or sales records. A credential file allows the spa to demonstrate that each therapist currently holds the required legal authorization and has completed mandated education. Appointment logs and protocols may show what treatment was performed, but they do not establish the therapist's legal right to practice.

Question 32Spa Business Operations and Management

Before a first-time guest receives a seaweed body wrap, which spa document should record allergies, medications, pregnancy status, and the guest's signed consent?

  1. The client intake and informed-consent form Correct answer.
  2. The therapist shift roster and commission report
  3. The safety data sheet binder for professional products
  4. The service menu with treatment descriptions and prices

Explanation

An intake and informed-consent form collects guest-specific health information and documents that the guest accepted the treatment after being informed of risks. Product safety sheets describe hazards of products but do not capture individual contraindications or consent. Service menus and staffing records support operations without providing this guest-level health documentation.

Question 33Spa Business Operations and Management

In a spa's monthly operating budget, which expense is classified as fixed because it does not change with the number of treatments delivered?

  1. The monthly subscription fee for the booking and POS system Correct answer.
  2. Retail product cost paid per unit sold
  3. Laundry charges billed per soiled pound
  4. Massage oil consumed during each treatment

Explanation

A fixed cost remains constant within the relevant range of activity, regardless of treatment volume. A monthly software subscription is incurred whether the spa delivers many treatments or few. Oil, per-pound laundry, and per-unit retail product costs vary directly with activity and are therefore variable costs.

Question 34Spa Business Operations and Management

A spa has monthly fixed costs of $24,000. Its average treatment price is $120, and variable cost per treatment is $45. How many treatments must it deliver per month to break even?

  1. 267 treatments
  2. 200 treatments
  3. 533 treatments
  4. 320 treatments Correct answer.

Explanation

Contribution margin per treatment is $120 minus $45, or $75. Break-even volume equals fixed costs divided by contribution margin: $24,000 divided by $75 equals 320 treatments. At 320 treatments, total contribution covers fixed costs and profit is zero.

Question 35Spa Business Operations and Management

A spa budgets service revenue of $85,000 for the month and sets a maximum service-payroll target of 32% of service revenue. What payroll amount should the manager plan for?

  1. $32,000
  2. $53,000
  3. $27,200 Correct answer.
  4. $85,000

Explanation

The payroll target is a percentage of service revenue, so multiply $85,000 by 0.32. The resulting maximum service payroll is $27,200. Planning to this figure keeps payroll aligned with the revenue budget before any approved variance.

Question 36Spa Business Operations and Management

A spa with 12 treatment rooms operates 30 days this month. It records 720 completed treatments and $68,400 in service revenue. What is revenue per available room per day (RevPAR)?

  1. $570
  2. $190 Correct answer.
  3. $95
  4. $228

Explanation

Available room-days equal 12 rooms multiplied by 30 days, or 360. RevPAR is service revenue divided by available room-days: $68,400 divided by 360 equals $190. This metric combines room capacity and revenue rather than showing only the average ticket.

Question 37Spa Business Operations and Management

A guest reports that a deep-tissue massage was painful and that the therapist ended the service 10 minutes early. Which front-desk response best reflects spa service-recovery standards?

  1. Offer a free upgrade on the guest's next visit before hearing the full complaint.
  2. Explain that the guest should have requested lighter pressure during the treatment and close the complaint.
  3. Listen without interrupting, acknowledge the impact, offer a remedy allowed by policy, and document the incident. Correct answer.
  4. State that all treatment sales are final and provide no further follow-up.

Explanation

Service recovery begins with listening and acknowledging the guest's experience before selecting a fair remedy within policy. Documentation then allows the spa to track the issue and improve consistency. Offering an upgrade before understanding the complaint or refusing all follow-up can escalate dissatisfaction rather than resolve it.

Question 38Spa Business Operations and Management

A spa compares two service lines. Massage: 300 treatments, $120 price, $40 variable cost. Facial: 200 treatments, $95 price, $25 variable cost. Which line generates the greater total contribution margin, and by how much?

  1. Facial, by $10,000
  2. Facial, by $2,000
  3. Massage, by $10,000 Correct answer.
  4. Massage, by $24,000

Explanation

Massage contribution margin is $120 minus $40, or $80 per treatment, times 300 treatments, for $24,000 total. Facial contribution margin is $95 minus $25, or $70 per treatment, times 200 treatments, for $14,000 total. Massage contributes $10,000 more than facial.

Question 39Spa Business Operations and Management

A spa is comparing two retail products. Product A: retail price $40, unit cost $16, annual unit sales 600, average inventory at cost $2,400. Product B: retail price $42, unit cost $21, annual unit sales 500, average inventory at cost $1,500. Which product has the higher gross margin return on inventory investment (GMROI), and what is that GMROI?

  1. Product A, at 6.0
  2. Product B, at 7.0 Correct answer.
  3. Product B, at 10.5
  4. Product A, at 14.4

Explanation

GMROI equals annual gross margin dollars divided by average inventory at cost. Product A earns ($40 minus $16) times 600, or $14,400, divided by $2,400, for a GMROI of 6.0. Product B earns ($42 minus $21) times 500, or $10,500, divided by $1,500, for a GMROI of 7.0, so Product B performs better.

Question 40Spa Business Operations and Management

A spa's retail inventory turns over 4.5 times per year at cost, with average inventory at cost of $50,000 and a 40% gross margin. To reach a target of 6.0 turns while keeping average inventory unchanged, how much additional annual retail sales are required?

  1. $125,000 Correct answer.
  2. $150,000
  3. $187,500
  4. $75,000

Explanation

Current annual cost of goods sold is 4.5 times $50,000, or $225,000. At 6.0 turns, cost of goods sold must be 6.0 times $50,000, or $300,000, requiring $75,000 more cost of goods sold. With a 40% gross margin, cost of goods sold is 60% of sales, so additional sales needed equal $75,000 divided by 0.60, or $125,000.

Question 41Spa Business Operations and Management

A spa schedules each 50-minute massage in a 75-minute room block. What is the primary operational purpose of the additional 25 minutes?

  1. Time reserved exclusively for retail product sales to the guest
  2. A second 25-minute treatment included in the service price
  3. Room reset, linen change, sanitation, and therapist documentation between guests Correct answer.
  4. A required unpaid rest period for the therapist after every treatment

Explanation

The unsold buffer protects sanitation standards, gives the therapist time to complete required notes, and allows the next guest to start on time. It is not billable treatment time and should not be treated as revenue-generating capacity. Scheduling without an adequate turnover buffer usually creates late starts and service-quality complaints.

Question 42Spa Business Operations and Management

Which spa metric is calculated by dividing completed billable treatment hours by total available treatment-room hours?

  1. Revenue per available room night
  2. Retail sell-through rate
  3. Treatment room utilization Correct answer.
  4. Average service ticket

Explanation

Treatment room utilization measures how much of the spa's available treatment capacity is actually converted into billable service hours. It highlights idle rooms, scheduling gaps, and demand shortfalls. Average ticket measures revenue per treatment, while sell-through measures retail movement.

Question 43Spa Business Operations and Management

A guest slips on a wet locker-room floor and is injured. What should spa staff do first?

  1. Wait until the manager finishes with another guest before acting
  2. Photograph the guest and post about the incident internally
  3. Ask the guest to sign a waiver before receiving assistance
  4. Secure the area, give first aid, and activate the emergency plan Correct answer.

Explanation

The immediate priority is guest safety: remove the hazard, provide appropriate first aid, and follow the spa's emergency procedure. Documentation and management notification come after the guest has been protected and helped. Delaying care to obtain paperwork or wait for a manager creates additional risk.

Question 44Spa Business Operations and Management

A spa takes 250 appointments in a month. Eight percent of guests do not arrive and do not cancel within the policy window, and no fee is collected. With an average service ticket of $110, what service revenue is lost?

  1. $880
  2. $2,200 Correct answer.
  3. $275
  4. $1,760

Explanation

Eight percent of 250 appointments equals 20 missed appointments. Multiplying 20 by the $110 average service ticket gives $2,200 in lost service revenue. The loss also includes therapist time that could have been sold to another guest.

Question 45Spa Business Operations and Management

A therapist is paid $22 per hour for an 8-hour shift. The therapist performs 6 billable treatment hours during the shift. What is the labor cost per billable treatment hour, rounded to the nearest cent?

  1. $29.33 Correct answer.
  2. $26.40
  3. $36.67
  4. $22.00

Explanation

The shift costs 8 hours multiplied by $22, or $176. Dividing $176 by 6 billable hours gives $29.33 per billable treatment hour. This figure is higher than the hourly wage because paid nonbillable time must be absorbed by the treatments actually delivered.

Question 46Spa Business Operations and Management

A spa sells $5,000 in gift cards during December. By year-end, guests have redeemed $3,200 of those cards for services. How should the remaining $1,800 be reported?

  1. As a reduction of the spa's retail inventory at cost
  2. As a cash refund liability owed to every gift card purchaser
  3. As service revenue because the cash has already been collected in December
  4. As deferred revenue until redeemed or expired under applicable law Correct answer.

Explanation

Cash received for unredeemed gift cards is not yet earned revenue because the service has not been delivered. It remains a liability until the guest redeems the card or the balance expires according to applicable law. Revenue is recognized only as services are performed.

Question 47Spa Business Operations and Management

A spa uses 40 retail units per week. The supplier's lead time is 2 weeks, and the spa keeps 30 units as safety stock. Using a simple reorder point, at what inventory level should the spa place a new order?

  1. 80 units
  2. 150 units
  3. 70 units
  4. 110 units Correct answer.

Explanation

Reorder point equals weekly usage multiplied by lead time, plus safety stock: 40 times 2 equals 80, and 80 plus 30 equals 110 units. Ordering at that level covers normal demand during the supplier's lead time while preserving the safety buffer.

Question 48Spa Business Operations and Management

A spa records $12,600 in retail sales from 900 guests in a month. What is the retail capture per guest?

  1. $14.00 Correct answer.
  2. $7.00
  3. $18.00
  4. $12.60

Explanation

Retail capture per guest is retail sales divided by the number of guests: $12,600 divided by 900 equals $14.00. This measure shows how effectively the spa converts guest visits into retail purchases. It differs from sell-through, which compares units sold with units available.

Question 49Spa Business Operations and Management

A 60-minute treatment sells for $150 and has a variable cost of $45. The spa sells 100 per month. A 20% discount is expected to raise volume to 130 per month. Assuming fixed costs do not change, what happens to monthly contribution margin?

  1. It increases by $3,150
  2. It remains unchanged because volume rises 30%
  3. It decreases by $750 Correct answer.
  4. It increases by $750

Explanation

At the original price, contribution margin is $150 minus $45, or $105 per treatment, totaling $10,500 at 100 treatments. After a 20% discount, the price is $120 and contribution margin falls to $75; at 130 treatments, total contribution is $9,750. The discount therefore reduces contribution margin by $750 despite the higher volume.

Question 50Spa Business Operations and Management

A spa reviews two treatments. Treatment X sells 400 units with a contribution margin of $60. Treatment Y sells 120 units with a contribution margin of $95. Average units sold across all treatments is 260, and average contribution margin is $70. How should Treatment Y be classified in a simple menu-engineering view?

  1. Plowhorse
  2. Star
  3. Dog
  4. Puzzle Correct answer.

Explanation

Treatment Y has low popularity because 120 units is below the 260-unit average, but high margin because $95 exceeds the $70 average. In menu engineering, a low-popularity, high-margin item is a puzzle that may be promoted, repositioned, or paired with popular services. Treatment X, by contrast, is a high-popularity, lower-margin plowhorse.