Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for
Question:
Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $10 per person. To differentiate his gym and better serve his clients, Anthony provides a towel, a bottle of water, and an after-workout protein shake to each person participating in a class, at a cost of $2.65 per person. Anthony employs four part-time instructors and pays them each $1,500 per month. He also pays himself a monthly salary of $6,500. Anthony’s other monthly costs are $1,800 for rent, $1,350 for depreciation on his 30 bikes, and $1,425 in utilities and insurance.
Required
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. Assume that he teaches 4,500 clients.
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