Question

Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $5.59 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 $2.17 per person. Anthony employs three part-time instructors and pays them each $1,452 per month. He also pays himself a monthly salary of $4,132. Anthony’s other monthly costs are $1,522 for rent, $1,418 for depreciation on his 32 bikes, and $1,802 in utilities and insurance.

(a) What is Anthony’s contribution margin per unit? (Round answer to 2 decimal places, e.g. 52.75.)

Contribution margin

$Enter contribution margin in dollars per unit

per unit

(b) What is Anthony’s contribution margin ratio? (Round answer to 2 decimal places, e.g. 52.75.)

Contribution margin ratio

Enter contribution margin ratio in percentages

%

(c) Prepare Anthony’s monthly contribution format income statement. Assume that he teaches 5,075 clients. (Round per unit values to 2 decimal places, e.g. 52.75 and all other answers to 0 decimal places, e.g. 5,275.)

Answer 1