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David Davis recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $10 per person. To differentiate his gym and
David Davis 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, David provides a towel, a bottle of water, and an after-workout protein shake to each person participating in a class, at a cost of $ 1.80 per person. David employs four part-time instructors and pays them each $1,500 per month. He also pays himself a monthly salary of $ 6,000. David's other monthly costs are $2,000 for rent, $ 1,500 for depreciation on his 34 bikes, and $ 1,525 in utilities and insurance. (a) What is David's contribution margin per unit? (Round answer to 2 decimal places, c.8. 52.75.) Contribution margin $ 82 per unit (b) What is David's contribution margin ratio? (Round answer to 2 decimal places, e.8.52.75.) Contribution margin ratio 82 % (c) Prepare David's monthly contribution format income statement. Assume that he teaches 4,500 clients. (Round per unit values to 2 decimal places, e.g. 52.75 and all other answers to O decimal places, e-. 1,234.) Per Unit 4500 TA 45000 Sales Revenue Variable Expenses 4500 8100 Towel. Water, Shake $ 36900 Contribution Margin Fixed Expenses . Instructor Salaries Experie 6000 1 Management Salary Expense. 6000 Rent Expense 2000 Instructor Salaries Expense $ 6000 i Management Salary Expense 6000 i Rent Expense 2000 i Depreciation Expense 1500 Utilities & Insurance Expense 1525 i Total Fixed Expenses 17025 Operating Income $ 19875
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