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Frank's Fitness evaluates the profitability of three segments: memberships, personal training, and classes. The financials are: Segment Revenue Direct Costs Memberships $500,000 $300,000 Personal Training

Frank's Fitness evaluates the profitability of three segments: memberships, personal training, and classes. The financials are:

Segment

Revenue

Direct Costs

Memberships

$500,000

$300,000

Personal Training

$200,000

$120,000

Classes

$80,000

$50,000

Frank is considering converting the classes area into an expanded personal training area.

Required: a. Calculate the necessary increase in the personal training segment margin to maintain Frank’s Fitness’ current income. b. Identify other considerations Frank should evaluate before deciding to eliminate the classes area to expand personal training.

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