The local gym has stationary bicycles. Assume these are available for use 500 hours per week. These bicycles are used in two different exercise programs. First, the cycling class takes two hours and earns a $15 contribution margin
per customer. Second, the combo class uses bicycles and floor routines and lasts for 1.5 hours and generates a $12 contribution margin
per customer. Which type of class generates the highest contribution margin
per constrained resource? If demand for combo classes could be restricted to 200 hours per week, how much contribution margin
could the gym generate on both types of classes?
Contribution margin is an important element of cost volume profit analysis that managers carry out to assess the maximum number of units that are required to be at the breakeven point. Contribution margin is the profit before fixed cost and taxes...