Exercise D2-16

Anthony Herrera recently fulfilled his long-time dream of opening a gym that offers spinning exercise classes for $5.00 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 $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?(Round answer to 2 decimal places, e.g. 52.75.)

Contribution margin$

per unit

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

Contribution margin ratio

%

Make a monthly contribution format income statement for Anthony. Assume that he teaches 5,000 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.)