Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $5 per person. To differentiate his gym and better serve his clients, Anthony provides a towel, a bottle of water, and an after-work out protein shake to each person participating in a class, at a cost of $1.75 per person. Anthony employs three part-time instructors and pays them each $1,000 per month.
He also pays himself a monthly salary of $4,000. Anthony's other monthly costs are $1,500 for rent, $1,250 for depreciation on his 30 bikes, and $1,800 in utilities and insurance.

a. What is Anthony's contribution margin per unit?
b. What is Anthony's contribution margin ratio?
c. Prepare Anthony's monthly contribution format income statement assuming he teaches 5,000 clients.

  • CreatedFebruary 21, 2014
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